Question 1

Camille signs an instrument in favor of Donald that states it is "subject to a certain agreement between Camille and Enzo." This instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because it is made subject to a separate agreement. 
C)  ​not negotiable, because it refers to a separate agreement. 
D)  ​nonnegotiable, because Camille and Enzo are not the same persons. 
A)  ​negotiable. 
B)  ​not negotiable, because it is made subject to a separate agreement. 
C)  ​not negotiable, because it refers to a separate agreement. 
D)  ​nonnegotiable, because Camille and Enzo are not the same persons.

Question 2

A promissory note can be a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

Only unconditional promises or orders can be negotiable.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Fact Pattern 15-1
Erin draws a check payable to "Foodland" to buy groceries.
-Refer to Fact Pattern 15-1.Erin's check is most likely​

Accepted Answer

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

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Fact Pattern 15-1
Erin draws a check payable to "Foodland" to buy groceries.
-Refer to Fact Pattern 15-1.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 9

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

Accepted Answer

A) True 
 B)False

Question 10

Fact Pattern 15-2
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 15-2.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 11

A statement in an instrument that payment can be made only out of a particular fund renders it nonnegotiable.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

To finance the purchase of an electric guitar, Milos signs an instrument promising to pay to "National Lenders" $1,800 with interest in installments with the final payment due August 15, 2018. To be negotiable, this instrument must include on its face

Accepted Answer

A)  ​any conditions on the sale of the goods. 
B)  ​any conditions to the disbursement of the funds. 
C)  ​any conditions to the repayment of the loan. 
D)  ​no conditions. 
A)  ​any conditions on the sale of the goods. 
B)  ​any conditions to the disbursement of the funds. 
C)  ​any conditions to the repayment of the loan. 
D)  ​no conditions.

Question 15

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 16

Oliver signs an instrument that states it is being executed "as per a contract for the sale of a case of apples dated May 1." This instrument is

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because banks cannot easily process commodities. 
C)  ​not negotiable, because it includes the specific date of a contract. 
D)  ​not negotiable, because it refers to an express contract. 
A)  ​negotiable. 
B)  ​not negotiable, because banks cannot easily process commodities. 
C)  ​not negotiable, because it includes the specific date of a contract. 
D)  ​not negotiable, because it refers to an express contract.

Question 17

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 18

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 19

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 20

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

Exam 15: Negotiable Instruments

Camille signs an instrument in favor of Donald that states it is "subject to a certain agreement between Camille and Enzo." This instrument is

A promissory note can be a negotiable instrument.

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

Only unconditional promises or orders can be negotiable.

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

Fact Pattern 15-1 Erin draws a check payable to "Foodland" to buy groceries. -Refer to Fact Pattern 15-1.Erin's check is most likely​

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

Fact Pattern 15-1 Erin draws a check payable to "Foodland" to buy groceries. -Refer to Fact Pattern 15-1.With respect to Erin's check, Foodland is

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

A statement in an instrument that payment can be made only out of a particular fund renders it nonnegotiable.

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

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

To finance the purchase of an electric guitar, Milos signs an instrument promising to pay to "National Lenders" $1,800 with interest in installments with the final payment due August 15, 2018. To be negotiable, this instrument must include on its face

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

Oliver signs an instrument that states it is being executed "as per a contract for the sale of a case of apples dated May 1." This instrument is

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

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

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Fact Pattern 15-1 Erin draws a check payable to "Foodland" to buy groceries. -Refer to Fact Pattern 15-1.Erin's check is most likely