Exam 27: Liability, Defenses, and Discharge

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Jen is the maker of a note, on which Bart is secondarily liable. Credit Instruments Company (CIC) is the current holder of the note. Bart will be obligated to pay the note if

(Multiple Choice)

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Question 41

Flo is an administrative assistant with Global Dispatch & Shipping Corporation, but has no authority to sign Global Dispatch checks. Flo orders merchandise from Home & Office Furnishings Company delivered to her home and pays with a Global Dispatch check, signing "Global Dispatch & Shipping Corp. by Flo, admin. assist." Home & Office does not know that Flo has no authority to sign the check. Who is liable on the check, and why?

(Essay)

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Question 42

An ordinary holder can recover nothing on an instrument that has been materially altered.

(True/False)

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Question 43

To properly present a draft for payment, a holder must present it to the drawer.

(True/False)

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Question 44

Rona issues a check for $4,000, dated May 1, to Stavros. The check is drawn on United Bank. Stavros indorses the check and transfers it to Tony. Stavros will be liable on the check if

(Multiple Choice)

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Question 45

Fiona writes a check "pay to the order of Gerri" drawn on Fiona's account at Home State Bank. Gerri presents the check for payment to Home State, which accepts it. Primarily liable on the check is

(Multiple Choice)

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Question 46

A person who signs an instrument without authorization can be held personally liable for payment by a holder in due course.

(True/False)

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Question 47

The general law of agency does not apply to negotiable instruments.

(True/False)

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Question 48

If delivery of goods becomes impossible, a party who has issued a draft or note on the contract has a defense for not paying it.

(True/False)

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Question 49

Resource Industries Inc.'s agent Polly is authorized to draw checks on the company's account in Sterling Bank. The checks are preprinted with the company name. Polly writes a check "pay to the order of Don [signed] Polly." Don presents the check for payment. If the bank dishonors it, liability extends to

(Multiple Choice)

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Question 50

Nan, an accountant for Outdoor Outfitters, Inc., issues company checks payable to nonexistent persons drawn on Outdoor's account at Peerless Bank. Nan indorses the checks and deposits them in her account. Outdoor discovers the theft and demands that Peerless recredit its account. Peerless's best defense is that

(Multiple Choice)

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Question 51

One of the transfer warranties is that the instrument has not been altered.

(True/False)

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Question 52

Vera gives Will a $500 check as payment for a debt. Will crudely increases the amount of the check to $5,000 and deposits the check in his First Bank account. Vera is liable for the payment of $5,000 to

(Multiple Choice)

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Question 53

A person is not liable on an instrument unless he or she has signed it personally or through an authorized representative.

(True/False)

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Question 54

Owen is a holder of a note obtained from Purchase Money, Inc. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, is subject to

(Multiple Choice)

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Question 55

Equity Credit Company has in its possession an instrument dated May 1, 2014. The instrument is payable to the order of First Choice Moving & Storage Company "on June 1, 2015," for $5,000. In the upper left corner is an address for Greater Metro Development Corporation-10 Corporate Park Avenue, Chicago, Illinois-and in the lower right corner is the signature of "Hilltop Investments, Inc., By Ida, President." In the lower left corner is stamped "ACCEPTED: Greater Metro Development Corporation by John, President, May 5, 2014." On the back is the signature of "First Choice Moving & Storage Company by Kathleen, President." Who, if anyone, is primarily liable on this instrument on May 1? On May 5? Who, if anyone, is secondarily liable on this instrument?

(Essay)

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Question 56

Len signs a note "payable to the order of Account Collection Agency." Unless Len has a valid defense against payment, his liability on this note is

(Multiple Choice)

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Question 57

Home Products, Inc., warrants its goods to be free of defects. Ian issues an instrument to obtain a thermos from Home Products that leaks. With respect to payment on the instrument, Ian

(Multiple Choice)

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Question 58

Fact Pattern 27-2 Lisa writes a check on her account at Metro Bank to Niklas to pay a debt. Niklas negotiates the check by indorsement to O'Leary, who presents it for payment to Prime Bank. -Refer to Fact Pattern 27-2. If Prime Bank dishonors the check, O'Leary can obtain payment from Niklas

(Multiple Choice)

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Question 59

Orson signs a check "pay to the order of Painless Dental" drawn on Orson's account in Quantum Bank. To impose liability on Orson if the bank dishonors the check, Painless Dental should present it for payment within

(Multiple Choice)

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Question 60

Showing 41 - 60 of 72

Exam 27: Liability, Defenses, and Discharge

Jen is the maker of a note, on which Bart is secondarily liable. Credit Instruments Company (CIC) is the current holder of the note. Bart will be obligated to pay the note if​

An ordinary holder can recover nothing on an instrument that has been materially altered.

To properly present a draft for payment, a holder must present it to the drawer.

Rona issues a check for $4,000, dated May 1, to Stavros. The check is drawn on United Bank. Stavros indorses the check and transfers it to Tony. Stavros will be liable on the check if​

Fiona writes a check "pay to the order of Gerri" drawn on Fiona's account at Home State Bank. Gerri presents the check for payment to Home State, which accepts it. Primarily liable on the check is​

A person who signs an instrument without authorization can be held personally liable for payment by a holder in due course.

The general law of agency does not apply to negotiable instruments.

If delivery of goods becomes impossible, a party who has issued a draft or note on the contract has a defense for not paying it.

One of the transfer warranties is that the instrument has not been altered.

Vera gives Will a $500 check as payment for a debt. Will crudely increases the amount of the check to $5,000 and deposits the check in his First Bank account. Vera is liable for the payment of $5,000 to​

A person is not liable on an instrument unless he or she has signed it personally or through an authorized representative.

Owen is a holder of a note obtained from Purchase Money, Inc. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, is subject to​

Len signs a note "payable to the order of Account Collection Agency." Unless Len has a valid defense against payment, his liability on this note is​

Home Products, Inc., warrants its goods to be free of defects. Ian issues an instrument to obtain a thermos from Home Products that leaks. With respect to payment on the instrument, Ian​

Fact Pattern 27-2 Lisa writes a check on her account at Metro Bank to Niklas to pay a debt. Niklas negotiates the check by indorsement to O'Leary, who presents it for payment to Prime Bank. -Refer to Fact Pattern 27-2. If Prime Bank dishonors the check, O'Leary can obtain payment from Niklas​

Orson signs a check "pay to the order of Painless Dental" drawn on Orson's account in Quantum Bank. To impose liability on Orson if the bank dishonors the check, Painless Dental should present it for payment within​

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Jen is the maker of a note, on which Bart is secondarily liable. Credit Instruments Company (CIC) is the current holder of the note. Bart will be obligated to pay the note if

Rona issues a check for $4,000, dated May 1, to Stavros. The check is drawn on United Bank. Stavros indorses the check and transfers it to Tony. Stavros will be liable on the check if

Fiona writes a check "pay to the order of Gerri" drawn on Fiona's account at Home State Bank. Gerri presents the check for payment to Home State, which accepts it. Primarily liable on the check is

Vera gives Will a $500 check as payment for a debt. Will crudely increases the amount of the check to $5,000 and deposits the check in his First Bank account. Vera is liable for the payment of $5,000 to

Owen is a holder of a note obtained from Purchase Money, Inc. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, is subject to

Len signs a note "payable to the order of Account Collection Agency." Unless Len has a valid defense against payment, his liability on this note is

Home Products, Inc., warrants its goods to be free of defects. Ian issues an instrument to obtain a thermos from Home Products that leaks. With respect to payment on the instrument, Ian

Fact Pattern 27-2 Lisa writes a check on her account at Metro Bank to Niklas to pay a debt. Niklas negotiates the check by indorsement to O'Leary, who presents it for payment to Prime Bank. -Refer to Fact Pattern 27-2. If Prime Bank dishonors the check, O'Leary can obtain payment from Niklas

Orson signs a check "pay to the order of Painless Dental" drawn on Orson's account in Quantum Bank. To impose liability on Orson if the bank dishonors the check, Painless Dental should present it for payment within