Question 1

The maker of a promissory note is a

Accepted Answer

A)  primary party. 
B)  secondary party. 
C)  payee. 
D)  drawee. 
A)  primary party. 
B)  secondary party. 
C)  payee. 
D)  drawee. A

Question 2

Unauthorized completion of an incomplete instrument is

Accepted Answer

A)  a real defense. 
B)  a personal defense. 
C)  no defense. 
D)  either a real defense or a personal defense. 
A)  a real defense. 
B)  a personal defense. 
C)  no defense. 
D)  either a real defense or a personal defense. B

Question 3

Holders in due course take an instrument subject to

Accepted Answer

A)  personal defenses only. 
B)  real defenses only. 
C)  both real and personal defenses. 
D)  no defenses. 
A)  personal defenses only. 
B)  real defenses only. 
C)  both real and personal defenses. 
D)  no defenses. B

Question 4

If a promissory note falls due on March 9, proper presentment can be made on March 10.

Accepted Answer

A) True 
 B)False

Question 5

An example of a personal defense is

Accepted Answer

A)  minority. 
B)  forgery. 
C)  lack of consideration. 
D)  illegality. 
A)  minority. 
B)  forgery. 
C)  lack of consideration. 
D)  illegality.

Question 6

Changing the amount of an instrument is

Accepted Answer

A)  forgery. 
B)  material alteration. 
C)  fraud in the execution. 
D)  unauthorized completion. 
A)  forgery. 
B)  material alteration. 
C)  fraud in the execution. 
D)  unauthorized completion.

Question 7

In what capacity is an accommodation party liable?

Accepted Answer

The accommodation party is liable in wha

Question 8

A signed instrument lacking some piece of information may be transferred to another person with the authority to complete the instrument according to instructions.

Accepted Answer

A) True 
 B)False

Question 9

If the drawee of a draft refuses to pay the instrument, it is dishonored.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following situations best indicates that a person would not qualify as a holder in due course?

Accepted Answer

A)  Arranges to pay for the instrument at a later time. 
B)  The person was notified that a prior indorser was discharged but in good faith. 
C)  The person took the instrument in payment of a prior debt. 
D)  The person accepted the instrument from a thief unaware of this fact. 
A)  Arranges to pay for the instrument at a later time. 
B)  The person was notified that a prior indorser was discharged but in good faith. 
C)  The person took the instrument in payment of a prior debt. 
D)  The person accepted the instrument from a thief unaware of this fact.

Question 11

Roberts issued a negotiable instrument to Blackmar based on a promise by Blackmar to provide Roberts with a complete gym set to be installed in the basement of his (Roberts) house. Roberts had been looking at this set in a catalog provided by Blackmar for several months, thinking that Blackmar was the salesperson for the company whose name appeared in the catalog. Blackmar, however, had no affiliation with the company. Roberts issued a promissory note to Blackmar thinking that he was paying for the gym set. Blackmar instead indorsed the note and passed it on to Upson for the money he owed to Upson. When Upson presented this note to Roberts for payment, Roberts refused to pay claiming fraud. Is Roberts liable to Upson or can he (Roberts) refuse to make good on the promissory note?

Accepted Answer

Roberts is liable for payment of the not

Question 12

A secondary party cannot limit her or his liability by a qualified indorsement.

Accepted Answer

A) True 
 B)False

Question 13

Personal defenses are not good against holders in due course.

Accepted Answer

A) True 
 B)False

Question 14

The defense of slight duress is good against all holders.

Accepted Answer

A) True 
 B)False

Question 15

A good defense against a holder in due course is

Accepted Answer

A)  payment at or before maturity. 
B)  material alteration. 
C)  slight duress. 
D)  lack of delivery. 
A)  payment at or before maturity. 
B)  material alteration. 
C)  slight duress. 
D)  lack of delivery.

Question 16

The defense that a person was a minor when he or she signed a note is a(n)

Accepted Answer

A)  real defense. 
B)  invalid defense. 
C)  personal defense. 
D)  none of these. 
A)  real defense. 
B)  invalid defense. 
C)  personal defense. 
D)  none of these.

Question 17

A person has taken an instrument ____________________ if he or she takes the instrument in payment of a prior debt.

Accepted Answer

The answer of A person has taken an instrument ____________________...

Question 18

Fagan, who held Slick's $500 three-month promissory note dated November 10, presented it to Slick on February 25 and demanded payment. Slick refused to pay it, claiming that presentment had not been made on the proper date. Can Fagan still legally collect on the instrument?

Accepted Answer

A)  Yes; the liability of primary parties is unconditional. 
B)  Yes; the liability of primary parties is conditional. 
C)  No; Slick is a secondary party. 
D)  No, because Slick is the payee. 
A)  Yes; the liability of primary parties is unconditional. 
B)  Yes; the liability of primary parties is conditional. 
C)  No; Slick is a secondary party. 
D)  No, because Slick is the payee.

Question 19

If a promissory note is not presented for payment on the due date, it is discharged.

Accepted Answer

A) True 
 B)False

Question 20

A person who receives a negotiable instrument as a gift is a holder in due course.

Accepted Answer

A) True 
 B)False

Exam 21: Rights and Duties of Parties

The maker of a promissory note is a

Unauthorized completion of an incomplete instrument is

Holders in due course take an instrument subject to

If a promissory note falls due on March 9, proper presentment can be made on March 10.

An example of a personal defense is

Changing the amount of an instrument is

In what capacity is an accommodation party liable?

A signed instrument lacking some piece of information may be transferred to another person with the authority to complete the instrument according to instructions.

If the drawee of a draft refuses to pay the instrument, it is dishonored.

Which of the following situations best indicates that a person would not qualify as a holder in due course?

A secondary party cannot limit her or his liability by a qualified indorsement.

Personal defenses are not good against holders in due course.

The defense of slight duress is good against all holders.

A good defense against a holder in due course is

The defense that a person was a minor when he or she signed a note is a(n)

A person has taken an instrument ____________________ if he or she takes the instrument in payment of a prior debt.

Fagan, who held Slick's $500 three-month promissory note dated November 10, presented it to Slick on February 25 and demanded payment. Slick refused to pay it, claiming that presentment had not been made on the proper date. Can Fagan still legally collect on the instrument?

If a promissory note is not presented for payment on the due date, it is discharged.

A person who receives a negotiable instrument as a gift is a holder in due course.

Foundations of Law and the Role of Ethics in Business

The Legal System in the United States and Its Constitutional Foundation

Personal, Business, and Cyber Crimes and the American Criminal Justice System

Tort Law: Traditional Torts and Cyber Torts

Litigation and Alternatives for Settling Civil Disputes

Contract Law: a Beginning

Agreement: Offer and Acceptance

Consideration

Capacity

Legality

Memorialize Contracts in Writingstatute of Frauds

Transfer of Contract Rights and Duties

The Termination of Contracts: Discharge

The Termination of Contracts: Breach of Contract

Formation of Sales and Lease Contracts

The Sales Contract: Transfer of Title and Risk of Loss

The Sales Contract: Performance, Breach, and Remedies for Breach

Product Liability Law

Nature and Types of Negotiable Instruments

Issue, Transfer, Indorsement, and Discharge of Negotiable Instruments

Checks and the Banking System in the Twenty-First Century

Employer-Employee Relationship

Principal-Agent Relationship

Principal-Agent, Employer-Employee, and Third-Party Relationships

Sole Proprietorships, Partnerships, and Limited Liability Organizations

Corporations and Franchising

Government Regulation of Business

Basic Legal Concepts of Property

Renting Real Property

Buying and Selling Real Property

Nature and Types of Bailments

Wills, Intestacy, and Estate Planning

Protecting the Consumer and the Taxpayer

Protecting the Borrower

Protecting the Creditor

Property, Casualty and Automobile Insurance

Personal Insurance

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