Question 1

Certification is an undertaking by the bank to pay the amount of the cheque to the drawer when it is presented for payment.

Accepted Answer

A) True 
 B)False  False

Question 2

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  False

Question 3

Tina gave Zach a cheque for $1000 to pay for a TV.Zach took the cheque to Cash Mart,he endorsed it,and Cash Mart paid him $950.Cash Mart is a holder in due course of a negotiable instrument.

Accepted Answer

A) True 
 B)False  True

Question 4

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. 
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 5

A person who negotiates an instrument in bearer form is known as

Accepted Answer

A) transferor. 
B) transferee. 
C) a transferor by delivery. 
D) a transferee by delivery. 
E) delivering party. 
A) transferor. 
B) transferee. 
C) a transferor by delivery. 
D) a transferee by delivery. 
E) delivering party.

Question 6

Many retail businesses have taken steps to minimize the risks associated with negotiable instruments.These steps include

Accepted Answer

A) not presenting any instrument for payment. 
B) not accepting accommodation bills. 
C) acting as a factor. 
D) not accepting cheques or bills of exchange as payment for goods. 
E) signing all drafts without recourse. 
A) not presenting any instrument for payment. 
B) not accepting accommodation bills. 
C) acting as a factor. 
D) not accepting cheques or bills of exchange as payment for goods. 
E) signing all drafts without recourse.

Question 7

The Bills of Exchange Act governs which of the following kinds of instruments?

Accepted Answer

A) bills of exchange only 
B) bills of exchange and negotiable instruments 
C) drafts only 
D) bills of exchange,promissory notes,and cheques 
E) bills of exchange,negotiable instruments,and cheques 
A) bills of exchange only 
B) bills of exchange and negotiable instruments 
C) drafts only 
D) bills of exchange,promissory notes,and cheques 
E) bills of exchange,negotiable instruments,and cheques

Question 8

A remote party who fails to meet the standards of a holder in due course is subject to real defences only.

Accepted Answer

A) True 
 B)False

Question 9

A minor who makes a cheque payable to a holder is always liable to the holder.

Accepted Answer

A) True 
 B)False

Question 10

Who is a drawee?

Accepted Answer

A drawee is the part

Question 11

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

Question 12

Explain the nature of the liability of a drawer on a draft and cheque.

Accepted Answer

The drawer of a draft undertakes that wh

Question 13

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

Accepted Answer

Although a document may not amount to a

Question 14

Delivery of a bill may be actual or

Accepted Answer

A) incomplete. 
B) ineffective. 
C) constructive. 
D) by notification. 
E) pretend. 
A) incomplete. 
B) ineffective. 
C) constructive. 
D) by notification. 
E) pretend.

Question 15

Who is the drawer of a bill?

Accepted Answer

The drawer of a bill

Question 16

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. 
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 17

A demand draft is

Accepted Answer

A) a bill of exchange that is payable within a stipulated period,after presentation. 
B) a bill of exchange on which the expression demand draft is written. 
C) a bill of exchange that is payable within a stipulated period,after the date stated on the instrument. 
D) a bill of exchange that is payable immediately upon presentation without any days of grace. 
E) a bill of exchange that is payable at sight. 
A) a bill of exchange that is payable within a stipulated period,after presentation. 
B) a bill of exchange on which the expression demand draft is written. 
C) a bill of exchange that is payable within a stipulated period,after the date stated on the instrument. 
D) a bill of exchange that is payable immediately upon presentation without any days of grace. 
E) a bill of exchange that is payable at sight.

Question 18

Use the fact situation in Q5 to answer the related question that follows. When Albert advised the bank that the cheque was lost and put the stop payment on it,he then asked the bank to replace it with another certified cheque.The bank responded by telling Albert that it would only replace the cheque if Albert entered into an indemnity agreement with the bank indemnifying the bank in the event the cheque was found and presented for payment.In this case,

Accepted Answer

A) the bank can refuse to replace the lost certified cheque because it always has the right to refuse to honour any negotiable instrument. 
B) the bank can refuse to replace the lost certified cheque unless Albert agrees to give it the indemnity agreement. 
C) the bank cannot refuse to replace the lost certified cheque with another one because Albert is the original drawer. 
D) the bank cannot refuse to replace the lost certified cheque because the stop payment is effective to protect the bank if the original certified cheque is presented for payment. 
E) none of the above 
A) the bank can refuse to replace the lost certified cheque because it always has the right to refuse to honour any negotiable instrument. 
B) the bank can refuse to replace the lost certified cheque unless Albert agrees to give it the indemnity agreement. 
C) the bank cannot refuse to replace the lost certified cheque with another one because Albert is the original drawer. 
D) the bank cannot refuse to replace the lost certified cheque because the stop payment is effective to protect the bank if the original certified cheque is presented for payment. 
E) none of the above

Question 19

Describe the difference between a bearer instrument and an order instrument.

Accepted Answer

A bearer instrument is one that is payab

Question 20

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

Exam 19: Negotiable Instruments

Certification is an undertaking by the bank to pay the amount of the cheque to the drawer when it is presented for payment.

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

Tina gave Zach a cheque for $1000 to pay for a TV.Zach took the cheque to Cash Mart,he endorsed it,and Cash Mart paid him $950.Cash Mart is a holder in due course of a negotiable instrument.

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

A person who negotiates an instrument in bearer form is known as

Many retail businesses have taken steps to minimize the risks associated with negotiable instruments.These steps include

The Bills of Exchange Act governs which of the following kinds of instruments?

A remote party who fails to meet the standards of a holder in due course is subject to real defences only.

A minor who makes a cheque payable to a holder is always liable to the holder.

Who is a drawee?

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.

Explain the nature of the liability of a drawer on a draft and cheque.

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

Delivery of a bill may be actual or

Who is the drawer of a bill?

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

A demand draft is

Describe the difference between a bearer instrument and an order instrument.

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

Law, society, and Business

The Machinery of Justice

The Law of Torts

Professional Liability: the Legal Challenges

Formation of a Contract: Offer and Acceptance

Formation of a Contract: Consideration and Intention

Formation of a Contract: Capacity to Contract and Legality of Object

Grounds Upon Which a Contract May Be Set Aside: Mistake and Misrepresentation

The Requirement of Writing

The Interpretation of Contracts

Privity of Contract and the Assignment of Contractual Rights

The Discharge of Contracts

Sale of Goods

Bailment and Leasing

Insurance and Guarantee

Agency and Franchising

The Contract of Employment

Intellectual Property

Interests in Land and Their Transfer

Landlord and Tenant

Mortgages of Land and Real Estate Transactions

Sole Proprietorships and Partnerships

The Nature of a Corporation and Its Formation

Corporate Governance: the Internal Affairs of Corporations

Corporate Governance: External Responsibilities

Secured Transactions

Creditors Rights

Government Regulation of Business

International Business Transactions

Electronic Commerce

Privacy

Breach of Contract and Its Remedies

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