Question 1

An instrument does not qualify as a check if it is described on its face by another term such as "money order."

Accepted Answer

A) True 
 B)False  False

Question 2

If an instrument is undated,its "date" is the date it is issued by the maker or drawer.

Accepted Answer

A) True 
 B)False  True

Question 3

Commercial paper cannot be used as a means of extending credit.

Accepted Answer

A) True 
 B)False  False

Question 4

A two-party instrument in which one person makes an unconditional promise in writing to pay another person,with or without interest,either on demand or at a specified,future time is a _____.

Accepted Answer

A)  promissory note 
B)  certificate of deposit 
C)  draft 
D)  check 
A)  promissory note 
B)  certificate of deposit 
C)  draft 
D)  check

Question 5

Identify the statement that holds true of revised Article 3 of the Uniform Commercial Code regarding checks.

Accepted Answer

A)  Under revised Article 3, an instrument does not qualify as a check if it contains the engraving "money order" on its face. 
B)  Revised Article 3 prevents an instrument from meeting the "unconditional promise" if it requires a countersignature of a person whose specimen signature appears on the draft. 
C)  Under revised Article 3, a payor bank may pay a postdated check before the stated date unless the drawer has notified the bank of postdating pursuant to a procedure set out in the Code. 
D)  Revised Article 3 states that an instrument which names a fixed time for payment should not contain a clause permitting the time for payment to be accelerated at the option of the maker. 
A)  Under revised Article 3, an instrument does not qualify as a check if it contains the engraving "money order" on its face. 
B)  Revised Article 3 prevents an instrument from meeting the "unconditional promise" if it requires a countersignature of a person whose specimen signature appears on the draft. 
C)  Under revised Article 3, a payor bank may pay a postdated check before the stated date unless the drawer has notified the bank of postdating pursuant to a procedure set out in the Code. 
D)  Revised Article 3 states that an instrument which names a fixed time for payment should not contain a clause permitting the time for payment to be accelerated at the option of the maker.

Question 6

Carlos borrowed $100 from his friend,Juanita.Carlos signed a handwritten note stating,"I promise to pay $100 to the order of Juanita." Under these circumstances,the note is _____.

Accepted Answer

A)  negotiable because it is a simple contract 
B)  not negotiable because it does not acknowledge the reason for the debt 
C)  not negotiable because it does not state the time payment is due 
D)  negotiable because it meets all the requirements for negotiability 
A)  negotiable because it is a simple contract 
B)  not negotiable because it does not acknowledge the reason for the debt 
C)  not negotiable because it does not state the time payment is due 
D)  negotiable because it meets all the requirements for negotiability

Question 7

A check is a draft payable on demand and drawn on a bank.

Accepted Answer

A) True 
 B)False

Question 8

An instrument that meets all of the formal requirements for negotiability is not a negotiable instrument if it is unenforceable or uncollectible for other reasons.

Accepted Answer

A) True 
 B)False

Question 9

If an instrument is nonnegotiable,_____.

Accepted Answer

A)  the Uniform Commercial Code controls the rights, and the general rules of property law control liabilities of the parties involved 
B)  the general rules of contract law control the rights and liabilities of the parties involved 
C)  the Uniform Commercial Code controls the rights, and the general rules of comparative law control the liabilities of the parties involved 
D)  the general rules of tort law control the rights and liabilities of the parties involved 
A)  the Uniform Commercial Code controls the rights, and the general rules of property law control liabilities of the parties involved 
B)  the general rules of contract law control the rights and liabilities of the parties involved 
C)  the Uniform Commercial Code controls the rights, and the general rules of comparative law control the liabilities of the parties involved 
D)  the general rules of tort law control the rights and liabilities of the parties involved

Question 10

One of the basic requirements for an instrument to be negotiable is that it must be payable:

Accepted Answer

A)  to a specific person. 
B)  in cash or kind. 
C)  "to order" or "to bearer." 
D)  on fulfillment of a conditional promise. 
A)  to a specific person. 
B)  in cash or kind. 
C)  "to order" or "to bearer." 
D)  on fulfillment of a conditional promise.

Question 11

Which of the following is true of the negotiability of a written instrument?

Accepted Answer

A)  The Uniform Commercial Code considers only instruments that are handwritten as negotiable. 
B)  An instrument written on a piece of wrapping paper will be considered a poor business practice and will not be negotiable. 
C)  The writing of an instrument does not have to be on any particular material; all that is required is that it be in writing to be negotiable. 
D)  An instrument written in pencil does not qualify as a negotiable instrument. 
A)  The Uniform Commercial Code considers only instruments that are handwritten as negotiable. 
B)  An instrument written on a piece of wrapping paper will be considered a poor business practice and will not be negotiable. 
C)  The writing of an instrument does not have to be on any particular material; all that is required is that it be in writing to be negotiable. 
D)  An instrument written in pencil does not qualify as a negotiable instrument.

Question 12

Which of the following statements is true of signing a negotiable instrument?

Accepted Answer

A)  An instrument in the form of a note must be signed by the payee who accepts the promise of the issuer. 
B)  An instrument in the form of a draft must be signed by the person giving the instruction to pay. 
C)  An instrument is not considered to be negotiable when the maker signs by writing his name on it. 
D)  A person or company cannot authorize an agent to sign instruments for it. 
A)  An instrument in the form of a note must be signed by the payee who accepts the promise of the issuer. 
B)  An instrument in the form of a draft must be signed by the person giving the instruction to pay. 
C)  An instrument is not considered to be negotiable when the maker signs by writing his name on it. 
D)  A person or company cannot authorize an agent to sign instruments for it.

Question 13

A teller's check is a:

Accepted Answer

A)  draft drawn by a bank on any other financial institutions other than a bank. 
B)  check drawn by a bank on an individual's funds. 
C)  draft on which the drawer or drawee are the same bank. 
D)  draft drawn by a bank on another bank or payable at or through a bank. 
A)  draft drawn by a bank on any other financial institutions other than a bank. 
B)  check drawn by a bank on an individual's funds. 
C)  draft on which the drawer or drawee are the same bank. 
D)  draft drawn by a bank on another bank or payable at or through a bank.

Question 14

What is the difference between a promissory note and a check? Why is the distinction important?

Accepted Answer

A promissory note is the simplest form o

Question 15

A draft is a:

Accepted Answer

A)  two-party instrument. 
B)  three-party instrument. 
C)  single-party instrument. 
D)  non-negotiable instrument. 
A)  two-party instrument. 
B)  three-party instrument. 
C)  single-party instrument. 
D)  non-negotiable instrument.

Question 16

Ricardo borrowed $5,000 from his friend,Lorenzo.Ricardo signed a handwritten note stating,"I promise to pay $5,000 to Lorenzo on or before August 1,2001,in return for the same amount borrowed from him on May 1,2001." Under these circumstances,the note is _____.

Accepted Answer

A)  negotiable because it was handwritten 
B)  not negotiable because the note states the reason for the debt 
C)  not negotiable because the note is not payable to bearer or to order 
D)  negotiable because it is a simple contract 
A)  negotiable because it was handwritten 
B)  not negotiable because the note states the reason for the debt 
C)  not negotiable because the note is not payable to bearer or to order 
D)  negotiable because it is a simple contract

Question 17

The attribute of negotiability means that commercial paper can be readily transferred and accepted as a substitute for money.

Accepted Answer

A) True 
 B)False

Question 18

A term authorizing the confession of judgment on an instrument when it is due affects the negotiability of the instrument.

Accepted Answer

A) True 
 B)False

Question 19

A promise or order is "payable on demand" if it states that it is payable:

Accepted Answer

A)  only to the bearer. 
B)  on a particular date. 
C)  on the fulfillment of a condition. 
D)  at the will of the holder of the instrument. 
A)  only to the bearer. 
B)  on a particular date. 
C)  on the fulfillment of a condition. 
D)  at the will of the holder of the instrument.

Question 20

Nigel,a resident of North Carolina,sent Claude,a resident of Lyon,France,a note that read,"Ninety days after date,I promise to pay to the order of Claude €5,000 (signed)Nigel." The note is:

Accepted Answer

A)  payable in an equivalent dollar amount. 
B)  not payable in the foreign money specified. 
C)  payable on demand in the foreign money specified. 
D)  payable at sight in an equivalent dollar amount. 
A)  payable in an equivalent dollar amount. 
B)  not payable in the foreign money specified. 
C)  payable on demand in the foreign money specified. 
D)  payable at sight in an equivalent dollar amount.

Exam 38: Negotiable Instruments

An instrument does not qualify as a check if it is described on its face by another term such as "money order."

If an instrument is undated,its "date" is the date it is issued by the maker or drawer.

Commercial paper cannot be used as a means of extending credit.

A two-party instrument in which one person makes an unconditional promise in writing to pay another person,with or without interest,either on demand or at a specified,future time is a _____.

Identify the statement that holds true of revised Article 3 of the Uniform Commercial Code regarding checks.

Carlos borrowed $100 from his friend,Juanita.Carlos signed a handwritten note stating,"I promise to pay $100 to the order of Juanita." Under these circumstances,the note is _____.

A check is a draft payable on demand and drawn on a bank.

An instrument that meets all of the formal requirements for negotiability is not a negotiable instrument if it is unenforceable or uncollectible for other reasons.

If an instrument is nonnegotiable,_____.

One of the basic requirements for an instrument to be negotiable is that it must be payable:

Which of the following is true of the negotiability of a written instrument?

Which of the following statements is true of signing a negotiable instrument?

A teller's check is a:

What is the difference between a promissory note and a check? Why is the distinction important?

A draft is a:

Ricardo borrowed $5,000 from his friend,Lorenzo.Ricardo signed a handwritten note stating,"I promise to pay $5,000 to Lorenzo on or before August 1,2001,in return for the same amount borrowed from him on May 1,2001." Under these circumstances,the note is _____.

The attribute of negotiability means that commercial paper can be readily transferred and accepted as a substitute for money.

A term authorizing the confession of judgment on an instrument when it is due affects the negotiability of the instrument.

A promise or order is "payable on demand" if it states that it is payable:

Nigel,a resident of North Carolina,sent Claude,a resident of Lyon,France,a note that read,"Ninety days after date,I promise to pay to the order of Claude €5,000 (signed)Nigel." The note is:

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Propertypart Two Contracts

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remediespart Three Sales

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contractspart Four Agency and Employment

The Agency Relationship-Creation, duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws-Part Five Business Organizations

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountantspart Six Property

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance-Part Seven Commercial Paper

Negotiation and Holder in Due Course

Liability of Parties

Checks and Electronic Fund Transfers-Part Eight Credit Transactions

Introduction to Security

Security Interests in Personal Property

Bankruptcy-Part Nine Government Regulation

The Antitrust Laws

Consumer Protection Laws

Environmental Regulation

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