Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following would be a bearer instrument?

Accepted Answer

A) A check payable to cash 
B) A check that says "pay to the order of John Jones" 
C) A check that says "pay to the order of Quality Oil Company" 
D) All of these. 
A) A check payable to cash 
B) A check that says "pay to the order of John Jones" 
C) A check that says "pay to the order of Quality Oil Company" 
D) All of these.

Question 3

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 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 commercial factor for negotiation.The factor 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) All of these. 
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) All of these.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Distinguish between a note and a certificate of deposit.How are they alike? How are they different? Explain your answer.

Accepted Answer

Promissory notes and CD's are alike in t

Question 7

A check is a draft payable on demand.

Accepted Answer

A) True 
 B)False

Question 8

An "I.O.U." is not considered a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 9

Michael is the maker of a note which states that it will be due on March 10, 2015.The note contains a clause stating that "payment will be limited to the proceeds of the sale of the contents of freight car No.1234." Is the note negotiable? Why or why not? Explain.

Accepted Answer

No, because it does not include a "fixed

Question 10

A substitute check created under Check 21 is the legal equivalent of the original check and contains all the information contained on the original check.

Accepted Answer

A) True 
 B)False

Question 11

Time paper is payable at a definite time.

Accepted Answer

A) True 
 B)False

Question 12

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 13

June purchases $8,000 of goods from Will on thirty days' credit, and Will assigns the account to Mark.If June finds the goods defective and only worth $6,000:

Accepted Answer

A) she has no defense against full payment since the account was assigned. 
B) she only needs to pay Mark $6,000 if Mark had notified her of the assignment. 
C) Mark is entitled to the full $8,000 since he acquires rights greater than those of Will, who assigned the contractual rights to payment. 
D) she must pay $6,000 directly to Will regardless of whether Mark notified her of the assignment. 
A) she has no defense against full payment since the account was assigned. 
B) she only needs to pay Mark $6,000 if Mark had notified her of the assignment. 
C) Mark is entitled to the full $8,000 since he acquires rights greater than those of Will, who assigned the contractual rights to payment. 
D) she must pay $6,000 directly to Will regardless of whether Mark notified her of the assignment.

Question 14

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) All of these. 
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) All of these.

Question 15

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 16

Which of the following is not a negotiable instrument?

Accepted Answer

A) A check 
B) A draft 
C) A certificate of deposit 
D) A stock certificate 
A) A check 
B) A draft 
C) A certificate of deposit 
D) A stock certificate

Question 17

A reference to another writing makes a promise or order conditional.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following would be an unconditional promise or order to pay?

Accepted Answer

A) I hereby acknowledge my debt to John Jones. 
B) I hereby assign all my rights under this instrument to John Jones. 
C) Pay to the order of bearer ten dollars. 
D) IOU fifty dollars. 
A) I hereby acknowledge my debt to John Jones. 
B) I hereby assign all my rights under this instrument to John Jones. 
C) Pay to the order of bearer ten dollars. 
D) IOU fifty dollars.

Question 19

Negotiability invests commercial paper with 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 20

Negotiability is wholly a matter of form.

Accepted Answer

A) True 
 B)False

Exam 26: Form and Content

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

Which of the following would be a bearer instrument?

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

Distinguish between a note and a certificate of deposit.How are they alike? How are they different? Explain your answer.

A check is a draft payable on demand.

An "I.O.U." is not considered a negotiable instrument.

Michael is the maker of a note which states that it will be due on March 10, 2015.The note contains a clause stating that "payment will be limited to the proceeds of the sale of the contents of freight car No.1234." Is the note negotiable? Why or why not? Explain.

A substitute check created under Check 21 is the legal equivalent of the original check and contains all the information contained on the original check.

Time paper is payable at a definite time.

Which of the following is not true?

June purchases $8,000 of goods from Will on thirty days' credit, and Will assigns the account to Mark.If June finds the goods defective and only worth $6,000:

The Check Clearing for the 21st Century Act:

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

Which of the following is not a negotiable instrument?

A reference to another writing makes a promise or order conditional.

Which of the following would be an unconditional promise or order to pay?

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

Negotiability is wholly a matter of form.

Introduction to Law

Business Ethics and the Social Responsibility of Business

Civil Dispute Resolution

Constitutional Law

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

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

51: The Legal Environment Of Business

52: Contracts.

53: Agency.

54: Sales

55: Negotiable Instruments

56: Unincorporated Business Association

57: Corporations

58: Debtor and Creditor Relation

59: Regulation of Business

60: Property.

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