Question 1

Which of the following additional terms will render an instrument nonnegotiable?

Accepted Answer

A) A clause protecting collateral to secure payment. 
B) A clause providing authorization to confess judgment. 
C) A clause waiving the benefit of any law intended for the protection or benefit of any person obligated on the instrument. 
D) A clause that provides for an undertaking in addition to the payment of money. 
A) A clause protecting collateral to secure payment. 
B) A clause providing authorization to confess judgment. 
C) A clause waiving the benefit of any law intended for the protection or benefit of any person obligated on the instrument. 
D) A clause that provides for an undertaking in addition to the payment of money.

Question 2

Which of the following statements about commercial paper is false?

Accepted Answer

A) The law of commercial paper is covered in Article 2 of the UCC. 
B) Commercial paper is a contract for the payment of money. 
C) Commercial paper may serve as a substitute for money payable immediately. 
D) Commercial paper can be used as a means of extending credit. 
A) The law of commercial paper is covered in Article 2 of the UCC. 
B) Commercial paper is a contract for the payment of money. 
C) Commercial paper may serve as a substitute for money payable immediately. 
D) Commercial paper can be used as a means of extending credit.

Question 3

A typed or rubber-stamped signature is sufficient if it was put on the instrument to validate it.

Accepted Answer

A) True 
 B)False

Question 4

Why does negotiability matter? Hint: To what is negotiability a prerequisite? Furthermore,why does this matter? Also,why is it important to society?

Accepted Answer

Negotiability is a prerequisite to becom

Question 5

Jill takes a loan from a bank.She signs a standard-form note prepared by the bank.The note obligates Jill to pay to the bank the amount of the loan,plus interest.Jill is the:

Accepted Answer

A) maker of the note. 
B) bearer of the note. 
C) drawee of the note. 
D) payee of the note. 
A) maker of the note. 
B) bearer of the note. 
C) drawee of the note. 
D) payee of the note.

Question 6

A cashier's check is a check on which the same bank is both drawer and drawee.

Accepted Answer

A) True 
 B)False

Question 7

Tim contracts with Home Dairy to deliver a bottle of milk to Tim's house every day.Home Dairy assigns Tim's contract to Mother Dairy.Tim is notified of the change and continues to get his daily bottle of milk.His contract is now with Mother Dairy.In this instance,Mother Dairy is the:

Accepted Answer

A) assignee. 
B) beneficiary. 
C) holder in due course. 
D) assignor. 
A) assignee. 
B) beneficiary. 
C) holder in due course. 
D) assignor.

Question 8

A check is NOT negotiable if it:

Accepted Answer

A) reads "Pay Kim Turner." 
B) states that it is payable only on a certain condition. 
C) is signed with a rubber-stamped signature. 
D) is issued by a drawer who lacks capacity to contract. 
A) reads "Pay Kim Turner." 
B) states that it is payable only on a certain condition. 
C) is signed with a rubber-stamped signature. 
D) is issued by a drawer who lacks capacity to contract.

Question 9

Which of the following authorizes a creditor to go into court if the debtor defaults and,with the debtor's acquiescence,to have a judgment entered against a debtor?

Accepted Answer

A) Power of Attorney 
B) Articles of Incorporation 
C) Commerce treaty 
D) Confession of Judgment 
A) Power of Attorney 
B) Articles of Incorporation 
C) Commerce treaty 
D) Confession of Judgment

Question 10

If an instrument is negotiable,the general rules of contract law control.

Accepted Answer

A) True 
 B)False

Question 11

A promissory note is a credit instrument.

Accepted Answer

A) True 
 B)False

Question 12

Susie Q,business manager of Pizza Uno,sends a check to Papa Bakery.On the check,the computer prints "TWO DOLLARS" in the description line field and "$200" in the numeric field.Susie signed the check and did not notice the discrepancy.The bank should honor the check for $2.

Accepted Answer

A) True 
 B)False

Question 13

An instrument payable on demand is:

Accepted Answer

A) not payable before the date of the instrument. 
B) payable before the date of the instrument. 
C) not payable after the date of the instrument. 
D) nonnegotiable without a date. 
A) not payable before the date of the instrument. 
B) payable before the date of the instrument. 
C) not payable after the date of the instrument. 
D) nonnegotiable without a date.

Question 14

Which of the following is not a requirement for a person to be considered a holder in due course?

Accepted Answer

A) The person must have exercised due diligence in determining whether there were certain claims or defenses against the instrument's payment. 
B) The person must have paid value for the instrument. 
C) The person acquired the instrument in good faith. 
D) The instrument cannot bear facial irregularities. 
A) The person must have exercised due diligence in determining whether there were certain claims or defenses against the instrument's payment. 
B) The person must have paid value for the instrument. 
C) The person acquired the instrument in good faith. 
D) The instrument cannot bear facial irregularities.

Question 15

Kathy writes a check on her checking account with a bank.In this instance,Kathy is the payee.

Accepted Answer

A) True 
 B)False

Question 16

Joe writes a check payable to Advanced Autos.The check is drawn on his checking account with Progressive Bank.The drawee on this check is:

Accepted Answer

A) Joe. 
B) Progressive Bank. 
C) Advanced Autos. 
D) the Federal Reserve. 
A) Joe. 
B) Progressive Bank. 
C) Advanced Autos. 
D) the Federal Reserve.

Question 17

A check drawn by a credit union on its account at a federally insured bank would be an example of a:

Accepted Answer

A) cashier's check. 
B) teller's check. 
C) counter check. 
D) traveler's check. 
A) cashier's check. 
B) teller's check. 
C) counter check. 
D) traveler's check.

Question 18

Which of the following statements does NOT affect an instrument's negotiability?

Accepted Answer

A) A draft that says: "Pay to the order of Sue Smith once she repairs my computer." 
B) An instrument that says: "This confirms my $1,000 debt to Sue Smith." 
C) A note that says: "Payment is conditional upon the terms of the mortgage between the parties dated June 1,2000." 
D) A notes that says: "This note is secured by the property described in the parties' mortgage of June 1,2000." 
A) A draft that says: "Pay to the order of Sue Smith once she repairs my computer." 
B) An instrument that says: "This confirms my $1,000 debt to Sue Smith." 
C) A note that says: "Payment is conditional upon the terms of the mortgage between the parties dated June 1,2000." 
D) A notes that says: "This note is secured by the property described in the parties' mortgage of June 1,2000."

Question 19

Which of the following occurs when retailers transform paper checks they take from customers and process them electronically?

Accepted Answer

A) Check transfer 
B) Check substitute 
C) Check exchange 
D) Check conversion 
A) Check transfer 
B) Check substitute 
C) Check exchange 
D) Check conversion

Question 20

Melissa Seles has a checking account at the Union Bank of New York.She goes to Home Depot and agrees to buy a room heater priced at $200.She writes a check to pay for it.The Union Bank of New York is the:

Accepted Answer

A) bearer. 
B) drawer. 
C) payee. 
D) drawee. 
A) bearer. 
B) drawer. 
C) payee. 
D) drawee.

Exam 31: Negotiable Instruments

Which of the following additional terms will render an instrument nonnegotiable?

Which of the following statements about commercial paper is false?

A typed or rubber-stamped signature is sufficient if it was put on the instrument to validate it.

Why does negotiability matter? Hint: To what is negotiability a prerequisite? Furthermore,why does this matter? Also,why is it important to society?

Jill takes a loan from a bank.She signs a standard-form note prepared by the bank.The note obligates Jill to pay to the bank the amount of the loan,plus interest.Jill is the:

A cashier's check is a check on which the same bank is both drawer and drawee.

Tim contracts with Home Dairy to deliver a bottle of milk to Tim's house every day.Home Dairy assigns Tim's contract to Mother Dairy.Tim is notified of the change and continues to get his daily bottle of milk.His contract is now with Mother Dairy.In this instance,Mother Dairy is the:

A check is NOT negotiable if it:

Which of the following authorizes a creditor to go into court if the debtor defaults and,with the debtor's acquiescence,to have a judgment entered against a debtor?

If an instrument is negotiable,the general rules of contract law control.

A promissory note is a credit instrument.

Susie Q,business manager of Pizza Uno,sends a check to Papa Bakery.On the check,the computer prints "TWO DOLLARS" in the description line field and "$200" in the numeric field.Susie signed the check and did not notice the discrepancy.The bank should honor the check for $2.

An instrument payable on demand is:

Which of the following is not a requirement for a person to be considered a holder in due course?

Kathy writes a check on her checking account with a bank.In this instance,Kathy is the payee.

Joe writes a check payable to Advanced Autos.The check is drawn on his checking account with Progressive Bank.The drawee on this check is:

A check drawn by a credit union on its account at a federally insured bank would be an example of a:

Which of the following statements does NOT affect an instrument's negotiability?

Which of the following occurs when retailers transform paper checks they take from customers and process them electronically?

Melissa Seles has a checking account at the Union Bank of New York.She goes to Home Depot and agrees to buy a room heater priced at $200.She writes a check to pay for it.The Union Bank of New York is the:

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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