Question 1

Which of the following is true of the articles of the Uniform Commercial Code?

Accepted Answer

A)  The law of commercial paper is covered in Article 3 and Article 4 of the Uniform Commercial Code. 
B)  Revised Article 3 of the Uniform Commercial Code developed in 1990 has now been adopted by all the states. 
C)  The law of commercial paper was originally adopted in Article 5 of the Uniform Commercial Code. 
D)  Negotiable documents, such as investment securities and documents of title, are not treated in the Uniform Commercial Code. 
A)  The law of commercial paper is covered in Article 3 and Article 4 of the Uniform Commercial Code. 
B)  Revised Article 3 of the Uniform Commercial Code developed in 1990 has now been adopted by all the states. 
C)  The law of commercial paper was originally adopted in Article 5 of the Uniform Commercial Code. 
D)  Negotiable documents, such as investment securities and documents of title, are not treated in the Uniform Commercial Code.

Question 2

A traveler's check that requires, as a condition to payment, the countersignature of a person whose specimen signature appears on the draft is:

Accepted Answer

A)  negotiable. 
B)  not negotiable. 
C)  negotiable only if it is payable "to cash." 
D)  not negotiable only if it is payable "at sight." 
A)  negotiable. 
B)  not negotiable. 
C)  negotiable only if it is payable "to cash." 
D)  not negotiable only if it is payable "at sight."

Question 3

A check is bearer paper if it:

Accepted Answer

A)  is made payable "to cash." 
B)  can be transferred only by indorsement. 
C)  can be negotiated only by indorsement. 
D)  is payable to the order of a specific person. 
A)  is made payable "to cash." 
B)  can be transferred only by indorsement. 
C)  can be negotiated only by indorsement. 
D)  is payable to the order of a specific person.

Question 4

If an instrument is nonnegotiable, the _____.

Accepted Answer

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

Question 5

If a note reads, "I promise to pay to the order of Sarah Smith, at my option, $40 or five bushels of apples, John Jones," is the note negotiable?

Accepted Answer

No. If the person obligated to pay off a

Question 6

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 7

The promissory note is the simplest form of commercial paper.

Accepted Answer

A) True 
 B)False

Question 8

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 9

Franklin Corp. sold money orders to drugstores. The money orders contained the words, "Payable to," followed by a blank. Can the money order qualify as a negotiable instrument?

Accepted Answer

Yes, the money order can qualify as a ne

Question 10

Commercial paper may serve as a substitute for money payable immediately, or it can be used as a means of extending credit.

Accepted Answer

A) True 
 B)False

Exam 38: Negotiable Instruments

Which of the following is true of the articles of the Uniform Commercial Code?

A traveler's check that requires, as a condition to payment, the countersignature of a person whose specimen signature appears on the draft is:

A check is bearer paper if it:

If an instrument is nonnegotiable, the _____.

If a note reads, "I promise to pay to the order of Sarah Smith, at my option, $40 or five bushels of apples, John Jones," is the note negotiable?

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

The promissory note is the simplest form of commercial paper.

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

Franklin Corp. sold money orders to drugstores. The money orders contained the words, "Payable to," followed by a blank. Can the money order qualify as a negotiable instrument?

Commercial paper may serve as a substitute for money payable immediately, or it can be used as a means of extending credit.

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