Question 1

On the death of a maker or acceptor of a bill of exchange,her or his liability passes to her or his personal representatives.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is NOT a real defence to an action on a bill?

Accepted Answer

A) misrepresentation 
B) incapacity of contract because of infancy 
C) cancellation of the instrument 
D) alteration of the instrument 
E) absence of delivery when the instrument is incomplete when taken

Question 3

Jack provides James with a cheque in payment for the delivery of goods.Later,when Jack checks the goods,he realizes that James has delivered the wrong goods.Jack wishes to cancel the cheque.Jack may go to the bank and request a

Accepted Answer

A) cancel document. 
B) negotiable instrument. 
C) de-certification order 
D) stop payment order. 
E) stop payee document.

Question 4

The two classes of negotiable instruments are

Accepted Answer

A) promissory notes and drafts. 
B) promissory notes and cheques. 
C) those governed by the Bills of Exchange Act and those governed by other statutes and other laws. 
D) sight drafts and time drafts. 
E) those governed by the Bills of Exchange Act and share certificates.

Question 5

A buyer on consumer credit has no defence against a finance company that sues him as holder of his promissory note.

Accepted Answer

A) True 
 B)False

Question 6

Liability of the drawee on a bill of exchange is dependent on the acceptance and delivery of the bill.

Accepted Answer

A) True 
 B)False

Question 7

S,the accountant for a railway company,forged the signature of the company's signing officer on a company cheque.The cheque was payable on the company's account and made out to another company controlled by S.The agreement between the company and its bank had no provision requiring the company to verify the monthly statements sent it by the bank for any discrepancies.Eventually,the company discovered the forgery and demanded that the bank return the money to its account,but the bank refused.In a lawsuit by the company against the bank for recovery of its money

Accepted Answer

A) the bank will succeed because it simply honoured the cheques,which were negotiable instruments. 
B) the bank will successfully defend the lawsuit because the cheques were forged by the company's accountant. 
C) the company will succeed because there was no agreement between the bank and the company requiring the company to verify its statements. 
D) the company will succeed but on a quantum meruit basis only. 
E) the bank will succeed because the company owed the bank a duty to maintain internal audit controls,which would have found the problem.

Question 8

Explain the consequences when a document is not negotiable by reason of a condition.

Accepted Answer

The answer of Explain the consequences when a document is...

Question 9

Sight drafts can be used as

Accepted Answer

A) certificates of deposit. 
B) promissory notes. 
C) collection devices. 
D) share certificates. 
E) finance notes.

Question 10

Delivery of a bill may be actual or constructive.

Accepted Answer

A) True 
 B)False

Question 11

Presentment of a bill is necessary where the bill of exchange is payable at sight,or after sight,because there is the need to determine the time at which payment is due.

Accepted Answer

A) True 
 B)False

Question 12

Sight drafts can be used as collection devices.

Accepted Answer

A) True 
 B)False

Question 13

Negotiability is the special quality possessed by negotiable instruments.

Accepted Answer

A) True 
 B)False

Question 14

Explain the difference between negotiable instruments and other contracts.

Accepted Answer

The answer of Explain the difference between negotiable instruments and...

Question 15

Negotiable instruments began as a form of bill of exchange.

Accepted Answer

A) True 
 B)False

Question 16

Joseph obtains a draft that states as follows: "pay to the order of Joseph Daniels the sum of $1000." Joseph wants to negotiate this instrument to Jack Spratt to pay a debt owing to Jack.To negotiate this instrument,Joseph must

Accepted Answer

A) indicate accepted on the draft and then deliver it to Jack. 
B) endorse and deliver the instrument to Jack. 
C) present the instrument to Jack's bank and have it accepted and then transfer it to Jack. 
D) endorse and present the instrument to Jack's bank. 
E) hand over the draft to Jack and get a receipt.

Question 17

Liability of the drawer,acceptor,or maker on a bill of exchange is dependent on

Accepted Answer

A) the delivery of the bill. 
B) the negotiation of the bill. 
C) the presentment of the bill. 
D) the signing of the bill. 
E) the signing and delivery of the bill.

Question 18

Who is a drawee?

Accepted Answer

The answer of Who is a drawee?...

Question 19

A promissory note is presented for acceptance.

Accepted Answer

A) True 
 B)False

Question 20

A holder in due course who suffers a loss arising from a forged endorsement can recover from the party who acquired the instrument immediately following the forgery.

Accepted Answer

A) True 
 B)False

Exam 19: Negotiable Instruments

On the death of a maker or acceptor of a bill of exchange,her or his liability passes to her or his personal representatives.

Which of the following is NOT a real defence to an action on a bill?

Jack provides James with a cheque in payment for the delivery of goods.Later,when Jack checks the goods,he realizes that James has delivered the wrong goods.Jack wishes to cancel the cheque.Jack may go to the bank and request a

The two classes of negotiable instruments are

A buyer on consumer credit has no defence against a finance company that sues him as holder of his promissory note.

Liability of the drawee on a bill of exchange is dependent on the acceptance and delivery of the bill.

Explain the consequences when a document is not negotiable by reason of a condition.

Sight drafts can be used as

Delivery of a bill may be actual or constructive.

Presentment of a bill is necessary where the bill of exchange is payable at sight,or after sight,because there is the need to determine the time at which payment is due.

Sight drafts can be used as collection devices.

Negotiability is the special quality possessed by negotiable instruments.

Explain the difference between negotiable instruments and other contracts.

Negotiable instruments began as a form of bill of exchange.

Joseph obtains a draft that states as follows: "pay to the order of Joseph Daniels the sum of $1000." Joseph wants to negotiate this instrument to Jack Spratt to pay a debt owing to Jack.To negotiate this instrument,Joseph must

Liability of the drawer,acceptor,or maker on a bill of exchange is dependent on

Who is a drawee?

A promissory note is presented for acceptance.

A holder in due course who suffers a loss arising from a forged endorsement can recover from the party who acquired the instrument immediately following the forgery.