Question 1

To obtain office supplies for Doctors Medical Clinic, Emma executes a draft in favor of Floyd. A draft is

Accepted Answer

A)  ​a conditional promise to pay money. 
B)  ​an unconditional written order to pay money. 
C)  ​a qualified promise to set aside a sum of money. 
D)  ​a restricted promise to deliver goods at a future date. 
A)  ​a conditional promise to pay money. 
B)  ​an unconditional written order to pay money. 
C)  ​a qualified promise to set aside a sum of money. 
D)  ​a restricted promise to deliver goods at a future date.

Question 2

​Jacob signs a promissory note payable to Kent "with interest" on which he conspicuously notes that it is "nonnegotiable." This instrument is

Accepted Answer

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

Question 3

An instrument that promises to pay "in goods" can be negotiable.

Accepted Answer

A) True 
 B)False

Question 4

Gail owes $5,000 in unpaid taxes. Using the back of an old t-shirt, she executes an instrument for $5,000 that otherwise meets the requirements for negotiability. This instrument is likely

Accepted Answer

A)  ​negotiable. 
B)  ​nonnegotiable, because an instrument must be on paper. 
C)  ​nonnegotiable, because a t-shirt is not sufficiently permanent. 
D)  ​nonnegotiable, because the government does not appreciate it. 
A)  ​negotiable. 
B)  ​nonnegotiable, because an instrument must be on paper. 
C)  ​nonnegotiable, because a t-shirt is not sufficiently permanent. 
D)  ​nonnegotiable, because the government does not appreciate it.

Question 5

Brie signs an instrument in which she promises to pay Carmen a certain price for her Dodge Dart. The instrument will be negotiable if it meets all of the requirements for negotiability, including that it is payable in

Accepted Answer

A)  ​goods equal in value to the market price of the car. 
B)  ​money. 
C)  ​any of the choices. 
D)  ​shares of stock equal in value to the market price of the car. 
A)  ​goods equal in value to the market price of the car. 
B)  ​money. 
C)  ​any of the choices. 
D)  ​shares of stock equal in value to the market price of the car.

Question 6

For a certificate of deposit to be negotiable, it must be signed by the maker.

Accepted Answer

A) True 
 B)False

Question 7

An undated instrument cannot be negotiable.

Accepted Answer

A) True 
 B)False

Question 8

Alvin signs a promissory note payable to the order of Borrow & Spend Loan Company. The note states that it is payable "with interest at the legal rate." This note is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because it does not specify a rate of interest. 
C)  ​not negotiable, because it is a promissory note. 
D)  ​not negotiable, because it is payable only with interest. 
A)  ​negotiable. 
B)  ​not negotiable, because it does not specify a rate of interest. 
C)  ​not negotiable, because it is a promissory note. 
D)  ​not negotiable, because it is payable only with interest.

Question 9

Oren signs an instrument payable to the order of Pay-Out Loans, Inc., "on or before" June 15. This instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because the maker can move up the payment date. 
C)  ​not negotiable, because moving up the payment date is optional. 
D)  ​not negotiable, because the exact payment date cannot be determined from the face of the instrument. 
A)  ​negotiable. 
B)  ​not negotiable, because the maker can move up the payment date. 
C)  ​not negotiable, because moving up the payment date is optional. 
D)  ​not negotiable, because the exact payment date cannot be determined from the face of the instrument.

Question 10

On the back of an envelope, Phoebe writes, "I promise to pay Quint or bearer $600 on demand. [Signed] Phoebe." What type of instrument is this? Is it negotiable? If not, why not?

Accepted Answer

This instrument is a promissory note and

Question 11

Instruments that say nothing about when payment is due are payable on demand.

Accepted Answer

A) True 
 B)False

Question 12

Fact Pattern 25-1
Erin draws a check payable to "Foodland" to buy groceries.
-Refer to Fact Pattern 25-1. With respect to Erin's check, Foodland is

Accepted Answer

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

Question 13

On a certificate of deposit, the bank is the maker and the depositor is the payee.

Accepted Answer

A) True 
 B)False

Question 14

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, Mid-state 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.

Question 15

Lucas signs an instrument payable to the order of MoneyNow, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Lucas fails to make a payment. This instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​nonnegotiable, because a holder can move up the payment date. 
C)  ​nonnegotiable, because moving up the payment date is conditional. 
D)  ​nonnegotiable, because the exact payment date cannot be determined from the face of the instrument. 
A)  ​negotiable. 
B)  ​nonnegotiable, because a holder can move up the payment date. 
C)  ​nonnegotiable, because moving up the payment date is conditional. 
D)  ​nonnegotiable, because the exact payment date cannot be determined from the face of the instrument.

Question 16

To be negotiable, an instrument must be payable on demand.

Accepted Answer

A) True 
 B)False

Question 17

A demand instrument is payable immediately after it is issued.

Accepted Answer

A) True 
 B)False

Question 18

The most common type of draft is a check.

Accepted Answer

A) True 
 B)False

Question 19

To finance the purchase of a house from Sander, Tobias signs an instrument promising to pay to "Uno Mortgage Company" $200,000 with interest in installments with the final payment due July 10, 2047. To be negotiable, this instrument must include the signature of

Accepted Answer

A)  ​a non-party witness. 
B)  ​Sander or Sander's realtor. 
C)  ​Tobias. 
D)  ​Uno's chief financial officer. 
A)  ​a non-party witness. 
B)  ​Sander or Sander's realtor. 
C)  ​Tobias. 
D)  ​Uno's chief financial officer.

Question 20

To be negotiable, an instrument must not be payable in money.

Accepted Answer

A) True 
 B)False

Exam 25: Negotiable Instruments

To obtain office supplies for Doctors Medical Clinic, Emma executes a draft in favor of Floyd. A draft is

​Jacob signs a promissory note payable to Kent "with interest" on which he conspicuously notes that it is "nonnegotiable." This instrument is

An instrument that promises to pay "in goods" can be negotiable.

Gail owes $5,000 in unpaid taxes. Using the back of an old t-shirt, she executes an instrument for $5,000 that otherwise meets the requirements for negotiability. This instrument is likely

Brie signs an instrument in which she promises to pay Carmen a certain price for her Dodge Dart. The instrument will be negotiable if it meets all of the requirements for negotiability, including that it is payable in

For a certificate of deposit to be negotiable, it must be signed by the maker.

An undated instrument cannot be negotiable.

Alvin signs a promissory note payable to the order of Borrow & Spend Loan Company. The note states that it is payable "with interest at the legal rate." This note is

Oren signs an instrument payable to the order of Pay-Out Loans, Inc., "on or before" June 15. This instrument is

On the back of an envelope, Phoebe writes, "I promise to pay Quint or bearer $600 on demand. [Signed] Phoebe." What type of instrument is this? Is it negotiable? If not, why not?

Instruments that say nothing about when payment is due are payable on demand.

Fact Pattern 25-1 Erin draws a check payable to "Foodland" to buy groceries. -Refer to Fact Pattern 25-1. With respect to Erin's check, Foodland is

On a certificate of deposit, the bank is the maker and the depositor is the payee.

Lucas signs an instrument payable to the order of MoneyNow, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Lucas fails to make a payment. This instrument is

To be negotiable, an instrument must be payable on demand.

A demand instrument is payable immediately after it is issued.

The most common type of draft is a check.

To finance the purchase of a house from Sander, Tobias signs an instrument promising to pay to "Uno Mortgage Company" $200,000 with interest in installments with the final payment due July 10, 2047. To be negotiable, this instrument must include the signature of

To be negotiable, an instrument must not be payable in money.

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

Jacob signs a promissory note payable to Kent "with interest" on which he conspicuously notes that it is "nonnegotiable." This instrument is