Exam 25: Creating a Negotiable Instrument

Tyron purchased a $2,900 promissory note from Jared for the discounted amount of $2,500.Tyron paid value,in good faith and without notice of any outstanding claims against this promissory note that read,"Pay to the order of Jared $2,900 on July 1,2009,for the purchase of a 2001 Ford Taurus provided no major problems with the car arise prior to said payment date." Tyron is a holder in due course of a negotiable note.

An indorsement is the signature of the

A claim in recoupment can be used against a holder in due course.

It was payday.Navidida decided to run some errands and then deposit her check in the bank over her lunch hour.So that she wouldn't have to spend too long at the bank,Navidida indorsed the back of the paycheck as follows,"Navidida Jones," before leaving work.While window shopping,Navidida lost the check.Roger finds Navidida's paycheck. (A)Will Roger be able to cash Navidida's check? (B)How could have Navidida indorsed the check so that she would not have to be concerned about losing the check?

George's Wholesaling agrees to purchase 1,000 pounds of bananas from Chickadee Exports at 39 cents per pound.George's does not have the money for the bananas now,but promises to pay in two months.Chickadee Exports wants George's business but needs the money now.Chickadee (as drawer)prepares an instrument ordering George's (as drawee)to pay $390 to Primary Bank (the payee).This is an example of 

Generally,Rita signs her name using an infinity symbol rather than her legal name.Rita signed an instrument using this symbol.Which statement is correct?

An instrument is negotiable if it satisfies six standards.Which of the following is a standard of negotiability?

Tim buys a high-powered tool from Binford Tools to use on the construction of his own garage.Binford Tools provides a full warranty on the tool for the first six months.To pay for the tool,Tim signs a negotiable promissory note which contains the FTC Consumer Credit Notice.Binford properly negotiates the note to First Finance.Within three weeks,the tool stops working and Binford refuses to repair or replace it.In the meantime,First Finance demands payment from Tim.Under the Federal Trade Commission rules,this consumer credit situation means First Finance 

To be negotiated,bearer paper must simply be delivered to the recipient.

Personal and real defenses are valid against an ordinary holder;only real defenses can be used against a holder in due course.

Valley National Bank issued a note promising to repay an investor on October 1,2011,three years from the date of issue,plus interest.The note

Tim wrote a negotiable note.Subsequently,Tim's debts were discharged in bankruptcy.If a holder in due course presents the note for payment,Tim does not have to pay.

Which is an unconditional order to pay?

On March 1 Donna wrote a check for $296 to Sun Services.When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?

The evening news was full of stories about how Levine sold fraudulent negotiable instruments to investors around the country.Two days later,Brighty,who did not hear the news reports,bought some of the fraudulent negotiable instruments from a swindled investor.Can Brighty claim the position of a holder in due course considering the publicity of the scam?

Matt wrote a $500 check to Alistar for some yard work that Alistar had done.What will Alistar have to do negotiate this instrument to Totally Tough,Inc.in payment for some yard equipment Alistar had bought?

A draft is always a check,but a check is not always a draft.

Commercial paper is a contract to pay money.

Maia wrote a check which said,"Pay to the order of Kevin Mathews $10.97." The next line of the check stated,"One thousand ninety-seven Dollars." In applying the rules of interpretation,how much should the drawee pay?

Which statement about notes and drafts is accurate?