Exam 20: Creation and Transfer of Negotiable Instruments

A promissory note is a conditional,written promise by one party to pay money to another party.

Because an indorsement is not required on bearer paper to deliver it,the indorsement has no legal effect.

In negotiable instruments,negotiation refers to the process of reaching agreement on the terms of a negotiable instrument.

Wayne issues a draft payable to Molly.Molly indorses the draft in blank on the back and gives it to Jerry.Which of the following statements correctly describes the status of this instrument?

Sandy signs a negotiable instrument that orders Sally to pay $1,000 to the order of Pat on May 4,2011.What type of instrument is this?

Once created,a negotiable instrument can be transferred to subsequent parties by arbitrage.

If an instrument is payable jointly using the word "and," both persons' indorsements are necessary to negotiate the instrument.

Which type of indorsement indicates that a specific person should be paid from the instrument?

Karen has a checking account at First Bank.Karen writes a check to Bonanza Apartments for her rent.In this situation:

Under the UCC,a negotiable instrument may provide that it is payable in foreign money.

What is the effect of a promissory note containing a conditional promise?

A(n)________ clause permits the maker to pay the amount due prior to the due date of the instrument.

Negotiable instruments are also known as commercial paper.

A negotiable instrument may be a conditional promise or order to pay.

Zora signs an unconditional written promise to pay a set amount of money to Will at a certain time.What type of instrument is this?

A trade acceptance is a sight draft that arises when credit is extended with the sale of goods.

Regarding a promissory note,the party who makes a promise to pay is the ________ of the note,and the party to whom the promise to pay is made is the ________.

If you run out of room on the back of an instrument for indorsements,the instrument may no longer be negotiated and must be cashed.

What problems hinder any efforts to establish uniform international rules for negotiable instruments? What additional variables are there in trying to establish a uniform international set of rules for negotiable instruments compared to doing so solely within the United States?

To be negotiable,a draft or check must contain the drawer's unconditional ________.