Exam 22: Creation of Negotiable Instruments

In a draft transaction,the payee is called the acceptor of the draft.

If the payee of the instrument is not mentioned on the face of the instrument,it is considered nonnegotiable.

Roger,a lawyer,borrowed money from Jax to start a business.He gave a promissory note to Jax promising to pay the money back anytime within the next five years.But in order to accept the note,Jax demanded a security deposit.Roger gave the gold that he owned as security.Roger in turn demanded that a specific clause be added to the promissory note to allow faster repayment of the loan in case he inherited money within the next five years.But even after five years,Roger was unable to complete payment.He made a new promissory note promising to finish payment within the next year,and promised to provide free legal service to Jax for the next two years. Which of the following is true of the validity of the new promissory note made by Roger?

Which of the following is true of a certificate of deposit?

A certificate of deposit is an order to pay.

A promissory note is a two-party transaction.

Roger,a lawyer,borrowed money from Jax to start a business.He gave a promissory note to Jax promising to pay the money back anytime within the next five years.But in order to accept the note,Jax demanded a security deposit.Roger gave the gold that he owned as security.Roger in turn demanded that a specific clause be added to the promissory note to allow faster repayment of the loan in case he inherited money within the next five years.But even after five years,Roger was unable to complete payment.He made a new promissory note promising to finish payment within the next year,and promised to provide free legal service to Jax for the next two years. Which of the following clause did Roger ask to add in the first promissory note?

What are nonnegotiable contracts?

An acceleration clause permits the maker to pay the amount due prior to the due date of an instrument.

The financial institution upon which a check is written is the payee of a check.

Who is the acceptor of a draft in a draft transaction?

The Uniform Commercial Code (UCC)signature requirement indicates that a negotiable instrument must be signed by ________.

Rubber-stamps are not recognized as signing instruments under the Uniform Commercial Code (UCC).

To qualify as a negotiable instrument,a promise cannot state any other undertaking by the person promising other than the payment of money.

A nonnegotiable contract is rendered either nontransferable or unenforceable.

Trade names or assumed names cannot be used for signing negotiable instruments.

An order instrument is payable to anyone in physical possession of the instrument and presents it for payment when it is due.

The creation of a negotiable instrument is known as negotiation.

List and briefly explain the functions of a negotiable instrument.

The Uniform Commercial Code (UCC)signature requirement indicates that a negotiable instrument must be signed by the drawer if it is a certificate of deposit.