Question 1

Any person in possession of a negotiable instrument payable to bearer is a holder.

Accepted Answer

A) True 
 B)False  True

Question 2

Fact Pattern 25-2
LNG Corporation and Mid-state Utility Company enter a contract for a sale of liquefied natural gas. LNG draws a draft unconditionally ordering Mid-state Utility to pay $50,000 to LNG's order in sixty days. Mid-state Utility signs and dates the draft.
-Refer to Fact Pattern 25-2. On this instrument, LNG is

Accepted Answer

A)  ​the drawee. 
B)  ​the drawer. 
C)  ​the maker. 
D)  ​the trader. 
A)  ​the drawee. 
B)  ​the drawer. 
C)  ​the maker. 
D)  ​the trader. B

Question 3

Theo signs a check payable to the order of Urban Bank, filling in the blanks for the amount with the figures "$100" and "One thousand and 00/100 dollars." This check is payable in the amount of

Accepted Answer

A)  ​$0. 
B)  ​$100. 
C)  ​$1,000. 
D)  ​$1,100. 
A)  ​$0. 
B)  ​$100. 
C)  ​$1,000. 
D)  ​$1,100. C

Question 4

Only unconditional promises or orders can be negotiable.

Accepted Answer

A) True 
 B)False

Question 5

Eden signs a promissory note payable to the order of First Mortgage Company. The note states that it is payable "with interest at the legal rate." This note is​

Accepted Answer

A)  ​negotiable. 
B)  ​nonnegotiable, because it does not specify a rate of interest. 
C)  ​nonnegotiable, because it is payable with interest. 
D)  ​nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument. 
A)  ​negotiable. 
B)  ​nonnegotiable, because it does not specify a rate of interest. 
C)  ​nonnegotiable, because it is payable with interest. 
D)  ​nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument.

Question 6

Builders Exchange, Inc., issues an instrument in favor of Custom Construction Company. For the instrument to be negotiable, it must

Accepted Answer

A)  ​be a conditional promise or order to pay. 
B)  ​be payable on demand or at a specific time. 
C)  ​be signed by the payee. 
D)  ​recite the consideration given in exchange for it. 
A)  ​be a conditional promise or order to pay. 
B)  ​be payable on demand or at a specific time. 
C)  ​be signed by the payee. 
D)  ​recite the consideration given in exchange for it.

Question 7

Barry draws a check payable to "Cash" and presents it to Dollars & Sense store for payment. This instrument is

Accepted Answer

A)  ​a bearer instrument. 
B)  ​an order instrument. 
C)  ​nonnegotiable. 
D)  ​void. 
A)  ​a bearer instrument. 
B)  ​an order instrument. 
C)  ​nonnegotiable. 
D)  ​void.

Question 8

Ben signs a promissory note for $1,500 in favor of Community College. The note is undated but specifies that it is "payable one month after date." This note is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because one month is not a reasonable time. 
C)  ​not negotiable, because there is no option to pay early. 
D)  ​not negotiable, because the maturity date cannot be determined from the face of the instrument. 
A)  ​negotiable. 
B)  ​not negotiable, because one month is not a reasonable time. 
C)  ​not negotiable, because there is no option to pay early. 
D)  ​not negotiable, because the maturity date cannot be determined from the face of the instrument.

Question 9

For an instrument to be negotiable, it must be in writing.

Accepted Answer

A) True 
 B)False

Question 10

An instrument payable "with interest" must specify a particular rate to be negotiable.

Accepted Answer

A) True 
 B)False

Question 11

To be negotiable, an instrument must be on material that lends itself to permanence.

Accepted Answer

A) True 
 B)False

Question 12

Fact Pattern 25-3
To borrow the funds to pay tuition at Alpha College, Bea signs an instrument unconditionally promising to pay to "Country Loan Corporation" $7,500 with interest in installments with the final payment due June 1, 2030.
-Refer to Fact Pattern 25-3. With respect to this instrument, Bea is

Accepted Answer

A)  ​the drawee. 
B)  ​the indorser. 
C)  ​the maker. 
D)  ​the payee. 
A)  ​the drawee. 
B)  ​the indorser. 
C)  ​the maker. 
D)  ​the payee.

Question 13

Fact Pattern 25-3
To borrow the funds to pay tuition at Alpha College, Bea signs an instrument unconditionally promising to pay to "Country Loan Corporation" $7,500 with interest in installments with the final payment due June 1, 2030.
-Refer to Fact Pattern 25-3. The instrument that Bea signed is most likely

Accepted Answer

A)  ​a certificate of deposit. 
B)  ​a draft. 
C)  ​an order to pay. 
D)  ​a promissory note. 
A)  ​a certificate of deposit. 
B)  ​a draft. 
C)  ​an order to pay. 
D)  ​a promissory note.

Question 14

An instrument whose terms indicate payment to no particular person is payable to no one.

Accepted Answer

A) True 
 B)False

Question 15

A check is a time instrument because it is payable in due time.

Accepted Answer

A) True 
 B)False

Question 16

Fred has six nieces, ages five to sixteen. He writes an order instrument for $50 that states "Pay to the order of my niece." The order instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because the amount of money is less than $500. 
C)  ​not negotiable, because it is illegal to write an order instrument payable to a relative. 
D)  ​nonnegotiable, because there is no specific person identified. 
A)  ​negotiable. 
B)  ​not negotiable, because the amount of money is less than $500. 
C)  ​not negotiable, because it is illegal to write an order instrument payable to a relative. 
D)  ​nonnegotiable, because there is no specific person identified.

Question 17

For an instrument to be negotiable, the word "negotiable" must appear on it.​

Accepted Answer

A) True 
 B)False

Question 18

Laura writes on a piece of paper, "I owe you $400," signs it, and gives it to Max. This instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because it does not include an express promise to pay. 
C)  ​not negotiable, because it does not recite any consideration. 
D)  ​not negotiable, because it does not state any conditions to payment. 
A)  ​negotiable. 
B)  ​not negotiable, because it does not include an express promise to pay. 
C)  ​not negotiable, because it does not recite any consideration. 
D)  ​not negotiable, because it does not state any conditions to payment.

Question 19

Jane signs an instrument using a "J" with a swirl around it. With this mark for a signature, the instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because an initial is not state the signer's name. 
C)  ​not negotiable, because an initial is not a signature. 
D)  ​not negotiable, because an initial is not an indication of serious intent. 
A)  ​negotiable. 
B)  ​not negotiable, because an initial is not state the signer's name. 
C)  ​not negotiable, because an initial is not a signature. 
D)  ​not negotiable, because an initial is not an indication of serious intent.

Question 20

A time draft is payable at a definite future time.

Accepted Answer

A) True 
 B)False

Exam 25: Negotiable Instruments

Any person in possession of a negotiable instrument payable to bearer is a holder.

Theo signs a check payable to the order of Urban Bank, filling in the blanks for the amount with the figures "$100" and "One thousand and 00/100 dollars." This check is payable in the amount of

Only unconditional promises or orders can be negotiable.

Eden signs a promissory note payable to the order of First Mortgage Company. The note states that it is payable "with interest at the legal rate." This note is​

Builders Exchange, Inc., issues an instrument in favor of Custom Construction Company. For the instrument to be negotiable, it must

Barry draws a check payable to "Cash" and presents it to Dollars & Sense store for payment. This instrument is

Ben signs a promissory note for $1,500 in favor of Community College. The note is undated but specifies that it is "payable one month after date." This note is

For an instrument to be negotiable, it must be in writing.

An instrument payable "with interest" must specify a particular rate to be negotiable.

To be negotiable, an instrument must be on material that lends itself to permanence.

An instrument whose terms indicate payment to no particular person is payable to no one.

A check is a time instrument because it is payable in due time.

Fred has six nieces, ages five to sixteen. He writes an order instrument for $50 that states "Pay to the order of my niece." The order instrument is

For an instrument to be negotiable, the word "negotiable" must appear on it.​

Laura writes on a piece of paper, "I owe you $400," signs it, and gives it to Max. This instrument is

Jane signs an instrument using a "J" with a swirl around it. With this mark for a signature, the instrument is

A time draft is payable at a definite future time.

Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Business and the Constitution

Business Ethics

Tort Law

Strict Liability and Product Liability

Intellectual Property Rights

Internet Law, Social Media, and Privacy

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Writing Requirement in Our Digital World

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance and Breach of Sales and Lease Contracts

Warranties

International and Space Law

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Small Businesses and Franchises

All Forms of Partnerships

Limited Liability Companies and Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, and Shareholders

Mergers and Takeovers

Investor Protection, Insider Trading, and Corporate Governance

Administrative Agencies

Consumer Law

Environmental Protection

Antitrust Law

Professional Liability and Accountability

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance

Wills and Trusts

The Legal Environment of Business

Torts and Crimes

Contracts and E-Contracts

Domestic and International Sales and Lease Contracts

Negotiable Instruments

Creditors Rights and Bankruptcy

Agency and Employment

Business Organizations

Government Regulation

Property and Its Protection

Filters

Eden signs a promissory note payable to the order of First Mortgage Company. The note states that it is payable "with interest at the legal rate." This note is

For an instrument to be negotiable, the word "negotiable" must appear on it.