Question 1

There are two types of commercial paper: express and implied.

Accepted Answer

A) True 
 B)False  False

Question 2

Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.

Accepted Answer

A) True 
 B)False  False

Question 3

A "holder" of order paper can be described as:

Accepted Answer

A)  the payee. 
B)  any person in possession of the instrument. 
C)  any person in possession of the instrument if it is payable to or indorsed to him. 
D)  the first party to come in contact with a negotiable instrument. 
A)  the payee. 
B)  any person in possession of the instrument. 
C)  any person in possession of the instrument if it is payable to or indorsed to him. 
D)  the first party to come in contact with a negotiable instrument. C

Question 4

A possessor of non-negotiable paper has the same rights as the person who made the original contract.

Accepted Answer

A) True 
 B)False

Question 5

There are three parties on a promise instrument: the maker,the drawee,and the payee.

Accepted Answer

A) True 
 B)False

Question 6

In June,The Seascape Gallery sells an oil painting to Collegiate Systems,Inc.Collegiate promises to pay for the painting in three months.The gallery prepares a draft ordering Collegiate Systems to pay $3,000 to First Bank on September 15.Collegiate Systems signs the draft.The draft is a:

Accepted Answer

A)  sight draft. 
B)  time draft. 
C)  trade acceptance. 
D)  Both b and C 
A)  sight draft. 
B)  time draft. 
C)  trade acceptance. 
D)  Both b and C

Question 7

Hayden owes Luther $5000.Hayden will only be able to pay this debt if he is able to sell his one-year-old Harley motorcycle,valued at $20,000.Hayden writes a check to Luther that reads,"Payable to the order of Luther the sum of $5000 as soon as my Harley motorcycle sells for a reasonable amount." This check is:

Accepted Answer

A)  negotiable,assuming Luther accepts delivery of the check. 
B)  negotiable if Hayden also includes a date that he expects the motorcycle to sell. 
C)  non-negotiable because it does not state a definite amount of money. 
D)  non-negotiable because the check is conditional. 
A)  negotiable,assuming Luther accepts delivery of the check. 
B)  negotiable if Hayden also includes a date that he expects the motorcycle to sell. 
C)  non-negotiable because it does not state a definite amount of money. 
D)  non-negotiable because the check is conditional.

Question 8

Sprock is a holder in due course on an instrument issued by Klingon.Which of the following defenses could be successfully raised by Klingon?

Accepted Answer

A)  Forgery. 
B)  Prior payment. 
C)  Breach of contract. 
D)  Fraud in the inducement. 
A)  Forgery. 
B)  Prior payment. 
C)  Breach of contract. 
D)  Fraud in the inducement.

Question 9

The possessor of non-negotiable commercial paper has the same rights-no more,no less-as the person who made the original contract.

Accepted Answer

A) True 
 B)False

Question 10

Under the UCC,a holder in due course is a holder who has given value for the instrument.Which of the following holders have given value for the instrument?

Accepted Answer

A)  Beth promises to paint the neighbor's house in exchange for a promissory note as an advance payment for the job. 
B)  Steve gives a note and mortgage on his house to his attorney as a retainer to handle his pending divorce. 
C)  Todd,a newspaper carrier,accepts a properly indorsed two-party check for the past two months of deliveries. 
D)  All of the above are correct. 
A)  Beth promises to paint the neighbor's house in exchange for a promissory note as an advance payment for the job. 
B)  Steve gives a note and mortgage on his house to his attorney as a retainer to handle his pending divorce. 
C)  Todd,a newspaper carrier,accepts a properly indorsed two-party check for the past two months of deliveries. 
D)  All of the above are correct.

Question 11

With non-negotiable commercial paper,a transferee's rights are conditional.

Accepted Answer

A) True 
 B)False

Question 12

To be negotiated order paper must first be indorsed but does not need to be delivered to the transferee.

Accepted Answer

A) True 
 B)False

Question 13

Good Faith means not only that someone not have notice of dishonesty in a transaction but the transaction must also have all appearance of commercial reasonableness.

Accepted Answer

A) True 
 B)False

Question 14

On March 1 Donna wrote a check for $296 to Sun Services.When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?

Accepted Answer

A check is overdue 90 days after its dat

Question 15

A draft is always a check,but a check is not always a draft.

Accepted Answer

A) True 
 B)False

Question 16

To be negotiated,bearer paper must simply be delivered to the recipient.

Accepted Answer

A) True 
 B)False

Question 17

What are some defenses against a holder in due course?

Accepted Answer

A)  check.is forged 
B)  maker was underage. 
C)  the check was based on an illegal transaction. 
D)  All of these answers are correct. 
A)  check.is forged 
B)  maker was underage. 
C)  the check was based on an illegal transaction. 
D)  All of these answers are correct.

Question 18

The possessor of a piece of commercial paper has an unconditional right to be paid,so long as:

Accepted Answer

A)  the paper is negotiable 
B)  it has been negotiated to the possessor; 
C)  the issuer cannot claim a valid defense 
D)  all of these answers are correct. 
A)  the paper is negotiable 
B)  it has been negotiated to the possessor; 
C)  the issuer cannot claim a valid defense 
D)  all of these answers are correct.

Question 19

Kent Weston wrote a check for $500 payable to the order of Chester Jones.Chester indorsed the back of the check as follows: "Chester Jones." The check is now:

Accepted Answer

A)  order paper. 
B)  bearer paper. 
C)  a cashier's check. 
D)  special paper. 
A)  order paper. 
B)  bearer paper. 
C)  a cashier's check. 
D)  special paper.

Question 20

Antoine makes a check out to cash and delivers it to Barley. What is it?

Accepted Answer

A)  A promissory note 
B)  A check 
C)  Bearer paper 
D)  Order paper. 
A)  A promissory note 
B)  A check 
C)  Bearer paper 
D)  Order paper.

Exam 14: Negotiable Instruments

There are two types of commercial paper: express and implied.

Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.

A "holder" of order paper can be described as:

A possessor of non-negotiable paper has the same rights as the person who made the original contract.

There are three parties on a promise instrument: the maker,the drawee,and the payee.

In June,The Seascape Gallery sells an oil painting to Collegiate Systems,Inc.Collegiate promises to pay for the painting in three months.The gallery prepares a draft ordering Collegiate Systems to pay $3,000 to First Bank on September 15.Collegiate Systems signs the draft.The draft is a:

Sprock is a holder in due course on an instrument issued by Klingon.Which of the following defenses could be successfully raised by Klingon?

The possessor of non-negotiable commercial paper has the same rights-no more,no less-as the person who made the original contract.

Under the UCC,a holder in due course is a holder who has given value for the instrument.Which of the following holders have given value for the instrument?

With non-negotiable commercial paper,a transferee's rights are conditional.

To be negotiated order paper must first be indorsed but does not need to be delivered to the transferee.

Good Faith means not only that someone not have notice of dishonesty in a transaction but the transaction must also have all appearance of commercial reasonableness.

On March 1 Donna wrote a check for $296 to Sun Services.When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?

A draft is always a check,but a check is not always a draft.

To be negotiated,bearer paper must simply be delivered to the recipient.

What are some defenses against a holder in due course?

The possessor of a piece of commercial paper has an unconditional right to be paid,so long as:

Kent Weston wrote a check for $500 payable to the order of Chester Jones.Chester indorsed the back of the check as follows: "Chester Jones." The check is now:

Antoine makes a check out to cash and delivers it to Barley. What is it?

Introduction to Law

Business Ethics and Social Responsibility

Courts,Litigation and Alterntive Dispute Resolution

Constitutional, Statutory, Administrative, and Common Law

Intentional Torts and Business Torts

Negligence and Strict Liability

Crime

International Law

Introduction to Contracts

Contract Impediments

Conclusion to Contracts

Practical Contracts

Introduction to Sales

Secured Transactions

Bankruptcy

Agency Law

Employment Law

Employment Discrimination

Labor Law

Starting a Business: Llcs and Other Option

Life and Death of a Corporation

Government Regulation: Securities and Antitrust

Accountants' Liability

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Intellectual Property

Real Property and Tenant: Landlord Law

Personal Property and Bailment

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