Question 1

Usually,who may have the power to surrender the instrument if full payment is made?

Accepted Answer

A) Indorser 
B) Accommodation maker 
C) Party to whom the holder presents the instrument 
D) Drawer 
A) Indorser 
B) Accommodation maker 
C) Party to whom the holder presents the instrument 
D) Drawer

Question 2

Mike authorizes his agent,Ben to borrow a sum of $10,000 on his behalf from the National Bank.Ben signs his name to a note without disclosing that the signature was on behalf of Mike.Who is liable on the note?

Accepted Answer

A) Only Mike is liable. 
B) National Bank is liable. 
C) Both of them are liable. 
D) Only Ben is liable. 
A) Only Mike is liable. 
B) National Bank is liable. 
C) Both of them are liable. 
D) Only Ben is liable.

Question 3

Which of the following refers to a person who executes an instrument?

Accepted Answer

A) Drawer 
B) Accommodation party 
C) Maker 
D) Holder 
A) Drawer 
B) Accommodation party 
C) Maker 
D) Holder

Question 4

Where the impostor has impersonated a person authorized to act for a payee:

Accepted Answer

A) the responsibility for determining the true identity of the payee is on the bank. 
B) the impostor has the power to negotiate a check drawn payable to the payee. 
C) the later holder does not have good title to the check as the payee's signature is not valid. 
D) the loss is shared by the maker and the bank that negotiated the forged instrument. 
A) the responsibility for determining the true identity of the payee is on the bank. 
B) the impostor has the power to negotiate a check drawn payable to the payee. 
C) the later holder does not have good title to the check as the payee's signature is not valid. 
D) the loss is shared by the maker and the bank that negotiated the forged instrument.

Question 5

In the case in the text Jones v.Wells Fargo Bank,N.A. ,what was the court's holding?

Accepted Answer

A) The bank was not liable for conversion because Wahab was listed on the account as authorized. 
B) The bank was not liable for conversion because the check was not obviously forged. 
C) The bank was liable for conversion because it was negligent when it failed to notice the check was obviously altered. 
D) The bank was liable for conversion because it paid someone not entitled to enforce the check. 
A) The bank was not liable for conversion because Wahab was listed on the account as authorized. 
B) The bank was not liable for conversion because the check was not obviously forged. 
C) The bank was liable for conversion because it was negligent when it failed to notice the check was obviously altered. 
D) The bank was liable for conversion because it paid someone not entitled to enforce the check.

Question 6

Joan carefully completes and signs a $1,000 note payable to Pete.Pete skillfully changes the amount of the note to $10,000,and negotiates it to Hilda for that amount.Hilda qualifies as a holder in due course.When Hilda presents the altered note to Joan for payment,Joan refuses to pay a penny more than $1,000.Which of the following is true?

Accepted Answer

A) Joan is not liable to Hilda. 
B) Joan is liable to Hilda for $1,000. 
C) Joan is liable to Hilda for $10,000. 
D) Joan's liability to Hilda will be determined by the relative negligence of Joan and Hilda. 
A) Joan is not liable to Hilda. 
B) Joan is liable to Hilda for $1,000. 
C) Joan is liable to Hilda for $10,000. 
D) Joan's liability to Hilda will be determined by the relative negligence of Joan and Hilda.

Question 7

Jason has knowledge of the fact that the check given to him bears Julie's forged signature.Nevertheless,he presents the check to ABC Bank.ABC Bank pays Jason,under a mistaken belief that the signature on the check is authentic.Bank cannot recover that payment from Jason.

Accepted Answer

A) True 
 B)False

Question 8

All signatures on a negotiable instrument are guaranteed to be treated as authentic due to what type of warranty?

Accepted Answer

A) Transfer warranty 
B) International commerce warranty 
C) Principal agent warranty 
D) Invoice protection warranty 
A) Transfer warranty 
B) International commerce warranty 
C) Principal agent warranty 
D) Invoice protection warranty

Question 9

What form of liability exists when a party is only responsible to pay on a negotiable instrument in case of default of the party who shoulders the obligation of liability for the instrument?

Accepted Answer

A) Primary Liability 
B) Secondary Liability 
C) Accidental Liability 
D) International Liability 
A) Primary Liability 
B) Secondary Liability 
C) Accidental Liability 
D) International Liability

Question 10

Signing a promissory note is an example of establishing primary liability in a negotiable instrument.

Accepted Answer

A) True 
 B)False

Exam 33: Liability of Parties

Usually,who may have the power to surrender the instrument if full payment is made?

Mike authorizes his agent,Ben to borrow a sum of $10,000 on his behalf from the National Bank.Ben signs his name to a note without disclosing that the signature was on behalf of Mike.Who is liable on the note?

Which of the following refers to a person who executes an instrument?

Where the impostor has impersonated a person authorized to act for a payee:

In the case in the text Jones v.Wells Fargo Bank,N.A. ,what was the court's holding?

Jason has knowledge of the fact that the check given to him bears Julie's forged signature.Nevertheless,he presents the check to ABC Bank.ABC Bank pays Jason,under a mistaken belief that the signature on the check is authentic.Bank cannot recover that payment from Jason.

All signatures on a negotiable instrument are guaranteed to be treated as authentic due to what type of warranty?

What form of liability exists when a party is only responsible to pay on a negotiable instrument in case of default of the party who shoulders the obligation of liability for the instrument?

Signing a promissory note is an example of establishing primary liability in a negotiable instrument.

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

Negotiable Instruments

Negotiation and Holder in Due Course

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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