Exam 13: Negotiable Instruments, Credit, and Bankruptcy

The party who agrees to make a payment to another party, based on a document presented to it, such as a bank, is called the drawee.

The first step in the collection process is typically a visit from the creditor's attorney.

For credit under a(n) ____ the terms define the credit period available to the customer and any discounts offered for early payment.

If an instrument is made ____, the party in possession is required only to deliver the instrument to transfer it.

A promise to pay a certain sum of money to another party is a type of commercial paper called a(n):

A suretyship is a guarantee by the debtor that he will repay his loans.

Which of the following requirements is necessary to be a holder in due course:

The ____ issues or creates the document that requests payment, probably from a bank, but it could be from another party.

To protect the rights of the mortgagee, a mortgage should be recorded with a state official.

Negotiable instruments are governed by:

The difference between the value of a business as a going concern compared with what is collected from selling the assets of the company is known as a:

In Summers Group v. Tempe Mechanical, Summers (Rexel) sold electrical materials used in a construction project that went into bankruptcy. Litigation developed over where various claimants stood to collect. The appeals court held that:

If a debtor is likely to dispose of property subject to a lien during a lawsuit, a creditor may obtain an attachment lien to protect itself.

If an instrument is found to be negotiable under the UCC, it may be freely traded without concern for any existing contract responsibilities if the instrument is in the possession of a holder in due course. To be a holder in due course, one must:

The ____ allows a debtor to retain the family home up to a specified amount free from creditors' claims.

____ means that the nonexempt assets are liquidated and the proceeds distributed among the creditors, who may not ask for more.

Orders to pay include notes and certificates of deposit.

Every year approximately ____ businesses use a Chapter 11 bankruptcy.

The most common form of credit is a(n):

A balloon note has one large payment up front then a series of smaller payments over time.