Question 1

Words of negotiability are:

Accepted Answer

A)  "To the order of." 
B)  "To bearer." 
C)  "Pay to." 
D)  All of these 
A)  "To the order of." 
B)  "To bearer." 
C)  "Pay to." 
D)  All of these

Question 2

April purchases $18,000 of goods from Lin on thirty days' credit,and Lin assigns the account to Indra.If April finds the goods defective and only worth $16,000:

Accepted Answer

A)  she has no defense against full payment since the account was assigned. 
B)  she only needs to pay Indra $16,000 if Indra had notified her of the assignment. 
C)  Indra is entitled to the full $18,000 since she acquires rights greater than those of Lin,who assigned the contractual rights to payment. 
D)  she must pay $16,000 directly to Lin regardless of whether Indra notified her of the assignment. 
A)  she has no defense against full payment since the account was assigned. 
B)  she only needs to pay Indra $16,000 if Indra had notified her of the assignment. 
C)  Indra is entitled to the full $18,000 since she acquires rights greater than those of Lin,who assigned the contractual rights to payment. 
D)  she must pay $16,000 directly to Lin regardless of whether Indra notified her of the assignment.

Question 3

Negotiability gives commercial paper a high degree of marketability and commercial utility by allowing it to be freely transferable and enforceable by a holder in due course.

Accepted Answer

A) True 
 B)False

Question 4

Joel's car broke down on a dark,rainy night.Along came Andy in his four-wheel drive truck with tools and supplies in the back.Joel didn't have any credit cards and had only $3.25 cash,so Andy told him to write a check or an IOU.Neither Andy nor Joel had any paper,so Joel wrote on the cover of Andy's lunchbox: "If my car is fixed right by Andy Walcott,I will pay him $150.(Signed)Joel Boyd." Andy indorses the note and takes it to a bank for negotiation.The bank refuses,saying it is non-negotiable because:

Accepted Answer

A)  it is written on a lunchbox. 
B)  it mentions the existence of a contract to repair the car. 
C)  it is conditional on satisfactory repair of the car. 
D)  Andy does not have a photo ID. 
A)  it is written on a lunchbox. 
B)  it mentions the existence of a contract to repair the car. 
C)  it is conditional on satisfactory repair of the car. 
D)  Andy does not have a photo ID.

Question 5

Which article of the UCC deals with "negotiable instruments"?

Accepted Answer

A)  Article 1 
B)  Article 2 
C)  Article 3 
D)  Article 9 
A)  Article 1 
B)  Article 2 
C)  Article 3 
D)  Article 9

Question 6

Only a bank may serve as the maker of a certificate of a deposit.

Accepted Answer

A) True 
 B)False

Question 7

An instrument payable at a fixed time subject to acceleration by the holder is not negotiable.

Accepted Answer

A) True 
 B)False

Question 8

A certificate of deposit differs from a promissory note in that,with a certificate of deposit:

Accepted Answer

A)  the maker is always a bank. 
B)  there are three parties to the transaction. 
C)  the payee of a CD must be paid on demand. 
D)  a writing is required. 
A)  the maker is always a bank. 
B)  there are three parties to the transaction. 
C)  the payee of a CD must be paid on demand. 
D)  a writing is required.

Question 9

Blaire buys some items at Friendly Grocery and writes a check to the store on her account at Mountain Bank.Who is the drawee?

Accepted Answer

A)  Blaire 
B)  Friendly Grocery 
C)  Mountain Bank 
D)  There is none. 
A)  Blaire 
B)  Friendly Grocery 
C)  Mountain Bank 
D)  There is none.

Question 10

Bearer paper can be negotiable.

Accepted Answer

A) True 
 B)False

Question 11

Amanda goes to American Bank where she uses $2,000 of her savings to purchase a six-month certificate of deposit.In this case:

Accepted Answer

A)  Amanda is the maker. 
B)  American Bank is the maker. 
C)  American Bank is the payee. 
D)  Amanda is the promisor. 
A)  Amanda is the maker. 
B)  American Bank is the maker. 
C)  American Bank is the payee. 
D)  Amanda is the promisor.

Question 12

A promise or order is payable at a definite time if it is payable:

Accepted Answer

A)  on or before a stated date. 
B)  at a definite period of time after sight or acceptance. 
C)  at a time readily ascertainable at the time the promise or order is issued. 
D)  All of these. 
A)  on or before a stated date. 
B)  at a definite period of time after sight or acceptance. 
C)  at a time readily ascertainable at the time the promise or order is issued. 
D)  All of these.

Question 13

An incomplete instrument is non-negotiable.

Accepted Answer

A) True 
 B)False

Question 14

An instrument contains the following language: "Harold T.Stone as President hereby promises to pay $12,348 to the order of Joe Jones Furniture for office equipment for Redkenn Corporation,payable from its corporate assets.(Signed)Harold T.Stone as President,Redkenn Corporation." Would the instrument be negotiable?

Accepted Answer

A)  No,because the promise refers to another contract 
B)  No,because its payment is limited to a particular fund 
C)  Yes,because it meets all the requirements of a negotiable instrument 
D)  Yes,because it is unequivocal 
A)  No,because the promise refers to another contract 
B)  No,because its payment is limited to a particular fund 
C)  Yes,because it meets all the requirements of a negotiable instrument 
D)  Yes,because it is unequivocal

Question 15

Which of the following is not true?

Accepted Answer

A)  To have the full benefit of negotiability,negotiable instruments not only must meet the requirements of negotiability but also must be acquired by a holder in due course. 
B)  A transferee of a negotiable instrument can acquire rights no greater than those of the transferor. 
C)  A holder in due course takes a negotiable instrument free of most of the defenses to which an assignee would be subject. 
D)  The number of checks written each year has decreased in recent years. 
A)  To have the full benefit of negotiability,negotiable instruments not only must meet the requirements of negotiability but also must be acquired by a holder in due course. 
B)  A transferee of a negotiable instrument can acquire rights no greater than those of the transferor. 
C)  A holder in due course takes a negotiable instrument free of most of the defenses to which an assignee would be subject. 
D)  The number of checks written each year has decreased in recent years.

Question 16

Identify the parties to checks and notes.

Accepted Answer

A check involves three parties.The drawe

Question 17

A draft involves only two parties: a drawer and a payee.

Accepted Answer

A) True 
 B)False

Question 18

Under Revised Article 3,a check which meets all the requirements of being a negotiable instrument except that it is not payable to bearer or order is nevertheless a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 19

Time paper is payable at a definite time.

Accepted Answer

A) True 
 B)False

Question 20

The Check Clearing for the 21st Century Act:

Accepted Answer

A)  creates a new negotiable instrument. 
B)  requires banks to accept checks in electronic form. 
C)  requires banks to create image replacement documents for any checks received. 
D)  allows customers to withdraw more cash from their accounts. 
A)  creates a new negotiable instrument. 
B)  requires banks to accept checks in electronic form. 
C)  requires banks to create image replacement documents for any checks received. 
D)  allows customers to withdraw more cash from their accounts.

Exam 26: Form and Content

Words of negotiability are:

April purchases $18,000 of goods from Lin on thirty days' credit,and Lin assigns the account to Indra.If April finds the goods defective and only worth $16,000:

Negotiability gives commercial paper a high degree of marketability and commercial utility by allowing it to be freely transferable and enforceable by a holder in due course.

Which article of the UCC deals with "negotiable instruments"?

Only a bank may serve as the maker of a certificate of a deposit.

An instrument payable at a fixed time subject to acceleration by the holder is not negotiable.

A certificate of deposit differs from a promissory note in that,with a certificate of deposit:

Blaire buys some items at Friendly Grocery and writes a check to the store on her account at Mountain Bank.Who is the drawee?

Bearer paper can be negotiable.

Amanda goes to American Bank where she uses $2,000 of her savings to purchase a six-month certificate of deposit.In this case:

A promise or order is payable at a definite time if it is payable:

An incomplete instrument is non-negotiable.

Which of the following is not true?

Identify the parties to checks and notes.

A draft involves only two parties: a drawer and a payee.

Under Revised Article 3,a check which meets all the requirements of being a negotiable instrument except that it is not payable to bearer or order is nevertheless a negotiable instrument.

Time paper is payable at a definite time.

The Check Clearing for the 21st Century Act:

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

A: Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance,breach,and Discharge

Contract Remedies

Relationship of Principal and Agent

Relationship With Third Parties

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Products Liability: Warranties and Strict Liability in Tort

Sales Remedies

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits,collections,and Funds Transfers

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature,formation,and Powers

Financial Structure

Management Structure

Fundamental Changes

Secured Transactions and Suretyship

Bankruptcy

Protection of Intellectual Property

Antitrust

Consumer Protection Double

Employment Law

Securities Regulation

Accountants Legal Liability

Environmental Law

International Business Law

Introduction to Property,property Insurance,bailments,and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Decedents Estates

Legal Terminology: Understanding Criminal and Civil Law Systems

Contract Law Terminology

Exploring the Legal Concepts of Agency and Fiduciary Duty

Understanding Key Legal Concepts in Sales and Contracts

Understanding the Terminology of Banking and Finance: Key Concepts and Definitions

Exploring Legal Concepts and Processes in Business Partnerships

Understanding Corporate Law: A Guide to Ultra Vires Acts, Subscribers, Debt Securities, and More

Understanding Key Terms in Secured Transactions and Bankruptcy Law

Legal Topics and Terms

Legal Topics in Property Ownership and Management

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