Question 1

Where the name of the payee is misspelled, the indorsement becomes invalid.

Accepted Answer

A) True 
 B)False  False

Question 2

Indorsements are required to negotiate bearer papers.

Accepted Answer

A) True 
 B)False  False

Question 3

An indorsement that purports to prohibit further negotiation of an instrument does not destroy the negotiability.

Accepted Answer

A) True 
 B)False  True

Question 4

What is the difference between a holder and holder in due course?

Accepted Answer

A holder is a person in possession of an

Question 5

Negotiable instruments are used as a substitute for money.

Accepted Answer

A) True 
 B)False

Question 6

A specially qualified indorsement can only be negotiated by indorsement and delivery.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following qualification renders a person as a holder in due course of a negotiable instrument?

Accepted Answer

A) if he takes the negotiable instrument for value 
B) if he is subject to claims and defenses against the transferor 
C) if he is in possession of an instrument issued in his name 
D) if he is in possession of an instrument issued in another's name 
A) if he takes the negotiable instrument for value 
B) if he is subject to claims and defenses against the transferor 
C) if he is in possession of an instrument issued in his name 
D) if he is in possession of an instrument issued in another's name

Question 8

What are qualified indorsements?

Accepted Answer

The UCC permits qualified indorsements w

Question 9

Which of the following would constitute the creation of an assignment?

Accepted Answer

A) if the transfer is of nonnegotiable instruments 
B) if a transfer qualifies as a negotiation under Article 3 
C) if a transferee qualifies as a holder in due course 
D) if the indorsement falls under the shelter principle 
A) if the transfer is of nonnegotiable instruments 
B) if a transfer qualifies as a negotiation under Article 3 
C) if a transferee qualifies as a holder in due course 
D) if the indorsement falls under the shelter principle

Question 10

Give an account of how an indorsement is made.

Accepted Answer

An indorsement is the signature of a sig

Question 11

Which of the following makes negotiable instruments transferable to a third party?

Accepted Answer

A) an insurance 
B) an indorsement 
C) a bill of exchange 
D) a trade acceptance 
A) an insurance 
B) an indorsement 
C) a bill of exchange 
D) a trade acceptance

Question 12

The allonge must be affixed to the instrument to be valid.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true about an unqualified indorsement?

Accepted Answer

A) It does not limit or disclaim liability. 
B) It obligates the indorser to pay for the instrument. 
C) It guarantees payment of the instrument if the maker defaults. 
D) It protects subsequent indorsees from liability. 
A) It does not limit or disclaim liability. 
B) It obligates the indorser to pay for the instrument. 
C) It guarantees payment of the instrument if the maker defaults. 
D) It protects subsequent indorsees from liability.

Question 14

Explain the no evidence of forgery, alteration, or irregularity requirement for an HDC under the UCC.

Accepted Answer

The UCC has a no evidence of forgery, al

Question 15

Lisa buys a used car from Kelly.She pays 10 percent down of the cost and signs a negotiable promissory note, promising to pay Kelly the remainder of the purchase price, with interest, in 12 equal monthly installments.At the time of sale, Kelly materially misrepresented the mileage of the automobile.Later, Kelly negotiates the note to Frances, who has no notice of the misrepresentation.Frances, an HDC, negotiates the note to Zoe, who is not an HDC.Which of the following is Zoe in regards to the indorsement?

Accepted Answer

A) a holder in due course 
B) a holder 
C) an assignee 
D) an assignor 
A) a holder in due course 
B) a holder 
C) an assignee 
D) an assignor

Question 16

The holder of a negotiable instrument has the same rights as the holder of an ordinary nonnegotiable contract.

Accepted Answer

A) True 
 B)False

Question 17

The ________ is a doctrine that says a holder who does not qualify as a holder in due course in his or her own right becomes a holder in due course if he or she acquires an instrument through a holder in due course.

Accepted Answer

A) exclusionary rule 
B) acceleration clause 
C) shelter principle 
D) good faith principle 
A) exclusionary rule 
B) acceleration clause 
C) shelter principle 
D) good faith principle

Question 18

An indorsement that contains the signature of the indorser and specifies the person to whom the indorser intends the instrument to be payable is known as a(n)________.

Accepted Answer

A) qualified indorsement 
B) unqualified indorsement 
C) black indorsement 
D) special indorsement 
A) qualified indorsement 
B) unqualified indorsement 
C) black indorsement 
D) special indorsement

Question 19

To qualify as an HDC, a person must be the holder of a negotiable instrument that was taken for value.

Accepted Answer

A) True 
 B)False

Question 20

If an instrument is payable to multiple persons using the word "and, " then the instrument ________.

Accepted Answer

A) cannot be negotiated any further 
B) cannot be negotiated by either party individually 
C) can only be further negotiated jointly 
D) can only be further negotiated with the signature of the drawer 
A) cannot be negotiated any further 
B) cannot be negotiated by either party individually 
C) can only be further negotiated jointly 
D) can only be further negotiated with the signature of the drawer

Exam 23: Holder in Due Course and Transferability

Where the name of the payee is misspelled, the indorsement becomes invalid.

Indorsements are required to negotiate bearer papers.

An indorsement that purports to prohibit further negotiation of an instrument does not destroy the negotiability.

What is the difference between a holder and holder in due course?

Negotiable instruments are used as a substitute for money.

A specially qualified indorsement can only be negotiated by indorsement and delivery.

Which of the following qualification renders a person as a holder in due course of a negotiable instrument?

What are qualified indorsements?

Which of the following would constitute the creation of an assignment?

Give an account of how an indorsement is made.

Which of the following makes negotiable instruments transferable to a third party?

The allonge must be affixed to the instrument to be valid.

Which of the following is true about an unqualified indorsement?

Explain the no evidence of forgery, alteration, or irregularity requirement for an HDC under the UCC.

The holder of a negotiable instrument has the same rights as the holder of an ordinary nonnegotiable contract.

The ________ is a doctrine that says a holder who does not qualify as a holder in due course in his or her own right becomes a holder in due course if he or she acquires an instrument through a holder in due course.

An indorsement that contains the signature of the indorser and specifies the person to whom the indorser intends the instrument to be payable is known as a(n)________.

To qualify as an HDC, a person must be the holder of a negotiable instrument that was taken for value.

If an instrument is payable to multiple persons using the word "and, " then the instrument ________.

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