Question 1

An order instrument is negotiated by delivery alone.

Accepted Answer

A) True 
 B)False

Question 2

A person who receives an instrument as a gift normally possesses the rights of an HDC.

Accepted Answer

A) True 
 B)False

Question 3

An instrument is not defective simply because it is overdue.

Accepted Answer

A) True 
 B)False

Question 4

Knowledge of one defense does not preclude a person from asserting HDC status in regard to all other defenses.

Accepted Answer

A) True 
 B)False

Question 5

A negotiable instrument can only be transferred by negotiation.

Accepted Answer

A) True 
 B)False

Question 6

Fact Pattern 25-A1 
Quiky Delivery Company contracts to provide services to Regal Bakeries, Inc. At Quiky's request, Regal makes checks for the services payable to "Quiky Delivery Co. and Secure Credit Corp." One check, however, is pay?able to "Quiky Delivery Co. Secure Credit Corp." .
-Refer to Fact Pattern 25-A1. Under the ruling in Case 25.1, Hyatt Corp. v. Palm Beach National Bank, this check is

Accepted Answer

A)  not payable. 
B)  payable alternatively or jointly, depending on Regal's bank's policy. 
C)  payable to Quiky and Secure only. 
D)  payable to Quiky or Secure. 
A)  not payable. 
B)  payable alternatively or jointly, depending on Regal's bank's policy. 
C)  payable to Quiky and Secure only. 
D)  payable to Quiky or Secure.

Question 7

Mona wants to negotiate a bearer instrument in her possession to Nat for an order instrument in Nat's possession. Indorsements are required to negotiate

Accepted Answer

A)  bearer instruments and order instruments. 
B)  bearer instruments only. 
C)  neither bearer instruments nor order instruments. 
D)  order instruments only. 
A)  bearer instruments and order instruments. 
B)  bearer instruments only. 
C)  neither bearer instruments nor order instruments. 
D)  order instruments only.

Question 8

Vladimir negotiates a bearer instrument to Wendy by

Accepted Answer

A)  assignment. 
B)  delivery. 
C)  presenting it in response to a demand by Wendy. 
D)  promising to pay. 
A)  assignment. 
B)  delivery. 
C)  presenting it in response to a demand by Wendy. 
D)  promising to pay.

Question 9

For an ordinary holder to become an HDC, the person from whom the holder acquired a negotiable instrument must have acted in good faith.

Accepted Answer

A) True 
 B)False

Question 10

Fact Pattern 25-1B 
First Bank's account agreement states that deposited items will be given pro?vi?sional credit only until collection is final, but the bank's practice is to extend immediate credit.
-Refer to Fact Pattern 25-1B. According to the reasoning of the court in Case 25.3, Mid Wisconsin Bank v. Forsgard Trading, Inc., First Bank's prac?tice is consistent with "reasonable commercial standards of fair dealing"

Accepted Answer

A)  if it is consistent with reasonable banking standards. 
B)  if First Bank's customers have notice, give value, and agree to it in good faith. 
C)  if First Bank has notice, gives value, and agrees to accept items in good faith. 
D)  under no circumstances. 
A)  if it is consistent with reasonable banking standards. 
B)  if First Bank's customers have notice, give value, and agree to it in good faith. 
C)  if First Bank has notice, gives value, and agrees to accept items in good faith. 
D)  under no circumstances.

Question 11

An HDC takes a negotiable instrument free of most defenses to it.

Accepted Answer

A) True 
 B)False

Question 12

A blank indorsement converts a bearer instrument to an order instrument.

Accepted Answer

A) True 
 B)False

Question 13

Yves negotiates an instrument to Zack. Negotiation is the transfer of an instrument

Accepted Answer

A)  for valuable consideration under a contract. 
B)  in a form and by a means that makes the transferee a holder. 
C)  pursuant to preliminary contract discussions. 
D)  without the payment of a recognized medium of exchange. 
A)  for valuable consideration under a contract. 
B)  in a form and by a means that makes the transferee a holder. 
C)  pursuant to preliminary contract discussions. 
D)  without the payment of a recognized medium of exchange.

Question 14

An instrument is defective if it has been previously honored.

Accepted Answer

A) True 
 B)False

Question 15

A payee whose name is misspelled on an instrument cannot indorse the instrument.

Accepted Answer

A) True 
 B)False

Question 16

A holder takes an instrument for value by performing the promise for which the instrument was issued.

Accepted Answer

A) True 
 B)False

Question 17

An allonge is required to negotiate an order instrument.

Accepted Answer

A) True 
 B)False

Question 18

Gina writes and signs a check payable to "Happy Market." Ira, Happy's manager, indorses the check "For deposit only." This is

Accepted Answer

A)  a blank indorsement. 
B)  a qualified indorsement. 
C)  a restrictive indorsement. 
D)  a special indorsement. 
A)  a blank indorsement. 
B)  a qualified indorsement. 
C)  a restrictive indorsement. 
D)  a special indorsement.

Question 19

Mike receives a payroll check from National Computer Systems, Inc., and indorses it by signing his name on the back of the check. This is

Accepted Answer

A)  a blank indorsement. 
B)  a qualified indorsement. 
C)  a restrictive indorsement. 
D)  a special indorsement. 
A)  a blank indorsement. 
B)  a qualified indorsement. 
C)  a restrictive indorsement. 
D)  a special indorsement.

Question 20

Owen is a holder of a promissory note obtained from Purchase Money, Inc. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, is subject to

Accepted Answer

A)  more defenses. 
B)  no defenses. 
C)  some defenses, but not as many. 
D)  the same defenses. 
A)  more defenses. 
B)  no defenses. 
C)  some defenses, but not as many. 
D)  the same defenses.

Exam 25: Transferability and Holder in Due Course

An order instrument is negotiated by delivery alone.

A person who receives an instrument as a gift normally possesses the rights of an HDC.

An instrument is not defective simply because it is overdue.

Knowledge of one defense does not preclude a person from asserting HDC status in regard to all other defenses.

A negotiable instrument can only be transferred by negotiation.

Mona wants to negotiate a bearer instrument in her possession to Nat for an order instrument in Nat's possession. Indorsements are required to negotiate

Vladimir negotiates a bearer instrument to Wendy by

For an ordinary holder to become an HDC, the person from whom the holder acquired a negotiable instrument must have acted in good faith.

An HDC takes a negotiable instrument free of most defenses to it.

A blank indorsement converts a bearer instrument to an order instrument.

Yves negotiates an instrument to Zack. Negotiation is the transfer of an instrument

An instrument is defective if it has been previously honored.

A payee whose name is misspelled on an instrument cannot indorse the instrument.

A holder takes an instrument for value by performing the promise for which the instrument was issued.

An allonge is required to negotiate an order instrument.

Gina writes and signs a check payable to "Happy Market." Ira, Happy's manager, indorses the check "For deposit only." This is

Mike receives a payroll check from National Computer Systems, Inc., and indorses it by signing his name on the back of the check. This is

Owen is a holder of a promissory note obtained from Purchase Money, Inc. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, is subject to

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

The Statute of Fraudswriting Requirements

Ethics and Business Decision Making

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crimes

Nature and Terminology

Agreement

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

E-Contracts and E-Signatures

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

The Function Creation of Negotiable Instruments

Liability, Defenses, and Discharge

Checks, the Banking System, and E-Money

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Liability to Third Parties and Termination

Employment and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporationsformation and Financing

Corporationsdirectors, Officers, Shareholders

Corporationsmerger, Consolidation, Termination

Corporationssecurities Law Corporate Governance

Law for Small Businesses

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Personal Property and Bailments

Real Property and Landlord-Tenant Relationships

Insurance

Wills and Trusts

Professional Liaility and Accountability

International Law in a Global Economy

Legal and Ethical Issues in Business

Legal Issues

Contracts and Business Law

Contracts and Liability

Banking and Payment Systems

Loan Security and Repossession in Credit Transactions

Employment Law and Ethics

Legal Issues in Corporate Governance and Business Operations

Legal and Ethical Issues in Environmental Protection and Consumer Rights

Legal Issues in Property and Land Use