Question 1

A check is an order by a bank itself to pay a sum of money to the order of another party.

Accepted Answer

A) True 
 B)False  False

Question 2

If an instrument is nonnegotiable,the rights of the parties are governed by the general principles of contract law.

Accepted Answer

A) True 
 B)False  True

Question 3

An acceptor is a drawer who has accepted the liability of paying the amount of money specified in a draft.

Accepted Answer

A) True 
 B)False  False

Question 4

Bruce agrees to buy Joe's ranch.They draw up a note,under which Bruce is to pay Joe in three installments,each payable on a specified date.Joe has concerns about Bruce's ability to pay on time,so he insists that the note include an acceleration clause.Such a clause would allow Joe to:

Accepted Answer

A)  accelerate the sale of the ranch. 
B)  demand payment of the entire amount Bruce owes him if a certain event occurs. 
C)  extend the date of maturity on the note until a certain date in the future. 
D)  accelerate the statute of limitations in a case involving negotiable instruments 
A)  accelerate the sale of the ranch. 
B)  demand payment of the entire amount Bruce owes him if a certain event occurs. 
C)  extend the date of maturity on the note until a certain date in the future. 
D)  accelerate the statute of limitations in a case involving negotiable instruments

Question 5

Negotiation of commercial paper results in lesser rights to transferees than those rights afforded assignees of contracts under contract law.

Accepted Answer

A) True 
 B)False

Question 6

A person who becomes a party to an instrument to add strength to the instrument for the benefit of another party to the instrument is called a:

Accepted Answer

A)  benefactor. 
B)  secondary obligor. 
C)  collateral obligor. 
D)  contingent beneficiary. 
A)  benefactor. 
B)  secondary obligor. 
C)  collateral obligor. 
D)  contingent beneficiary.

Question 7

When ambiguous language in an instrument exists:

Accepted Answer

A)  the instrument becomes non-negotiable. 
B)  handwriting supersedes typewritten words. 
C)  typewritten words supercede handwritten words. 
D)  judgment interest accumulates at the rate of 5% per annum. 
A)  the instrument becomes non-negotiable. 
B)  handwriting supersedes typewritten words. 
C)  typewritten words supercede handwritten words. 
D)  judgment interest accumulates at the rate of 5% per annum.

Question 8

JeanClaude creates and signs a promissory note.He promises to pay Suzy $1,000 worth of French francs plus $500 worth of custom-made shirts on October 15,in exchange for Suzy's help in renovating his kitchen.The note is :

Accepted Answer

A)  nonnegotiable, because of JeanClaude's signature. 
B)  negotiable, because all the elements of the note are valid. 
C)  nonnegotiable, because it calls for payment in French francs. 
D)  nonnegotiable, because it calls for payment in shirts. 
A)  nonnegotiable, because of JeanClaude's signature. 
B)  negotiable, because all the elements of the note are valid. 
C)  nonnegotiable, because it calls for payment in French francs. 
D)  nonnegotiable, because it calls for payment in shirts.

Question 9

Order instruments are negotiated by:

Accepted Answer

A)  delivery with the necessary indorsement. 
B)  word of mouth. 
C)  constructive recovery. 
D)  an unconditional promise. 
A)  delivery with the necessary indorsement. 
B)  word of mouth. 
C)  constructive recovery. 
D)  an unconditional promise.

Question 10

An authorized agent signing an instrument will not be liable on the instrument if the agent discloses on the paper either the identity of the principal or the fact that the agent has signed in a representative capacity.

Accepted Answer

A) True 
 B)False

Question 11

Commercial paper facilitates the transfer of funds and payment.

Accepted Answer

A) True 
 B)False

Question 12

A check that is postdated ceases to be order paper.

Accepted Answer

A) True 
 B)False

Question 13

An accommodation party is a third person who signs an instrument to lend credit to another party to the paper.

Accepted Answer

A) True 
 B)False

Question 14

A negotiable instrument may be partly printed and partly typewritten.

Accepted Answer

A) True 
 B)False

Question 15

The payee has no rights in an instrument until the drawer or the maker has delivered it to the payee.

Accepted Answer

A) True 
 B)False

Question 16

A(n)__________ instrument's terms are enforceable,but the instrument is treated simply as a contract governed by contract law.

Accepted Answer

A)  nonnegotiable 
B)  negotiable 
C)  accommodation 
D)  secondary 
A)  nonnegotiable 
B)  negotiable 
C)  accommodation 
D)  secondary

Question 17

Revised UCC Article 3 refers to all of the following as secondary obligors,except:

Accepted Answer

A)  drawers 
B)  indorsers 
C)  accommodation parties 
D)  acceptors 
A)  drawers 
B)  indorsers 
C)  accommodation parties 
D)  acceptors

Question 18

If an order or promise is not for money,the instrument is not negotiable.

Accepted Answer

A) True 
 B)False

Question 19

Anonnegotiable instrument's terms are not enforceable.

Accepted Answer

A) True 
 B)False

Question 20

A certificate of deposit is a written promise made and signed by the maker to pay a sum certain in money to the holder of the instrument.

Accepted Answer

A) True 
 B)False

Exam 27: Kinds of Negotiable Instruments and Negotiability

A check is an order by a bank itself to pay a sum of money to the order of another party.

If an instrument is nonnegotiable,the rights of the parties are governed by the general principles of contract law.

An acceptor is a drawer who has accepted the liability of paying the amount of money specified in a draft.

Bruce agrees to buy Joe's ranch.They draw up a note,under which Bruce is to pay Joe in three installments,each payable on a specified date.Joe has concerns about Bruce's ability to pay on time,so he insists that the note include an acceleration clause.Such a clause would allow Joe to:

Negotiation of commercial paper results in lesser rights to transferees than those rights afforded assignees of contracts under contract law.

A person who becomes a party to an instrument to add strength to the instrument for the benefit of another party to the instrument is called a:

When ambiguous language in an instrument exists:

JeanClaude creates and signs a promissory note.He promises to pay Suzy $1,000 worth of French francs plus $500 worth of custom-made shirts on October 15,in exchange for Suzy's help in renovating his kitchen.The note is :

Order instruments are negotiated by:

An authorized agent signing an instrument will not be liable on the instrument if the agent discloses on the paper either the identity of the principal or the fact that the agent has signed in a representative capacity.

Commercial paper facilitates the transfer of funds and payment.

A check that is postdated ceases to be order paper.

An accommodation party is a third person who signs an instrument to lend credit to another party to the paper.

A negotiable instrument may be partly printed and partly typewritten.

The payee has no rights in an instrument until the drawer or the maker has delivered it to the payee.

A(n)__________ instrument's terms are enforceable,but the instrument is treated simply as a contract governed by contract law.

Revised UCC Article 3 refers to all of the following as secondary obligors,except:

If an order or promise is not for money,the instrument is not negotiable.

Anonnegotiable instrument's terms are not enforceable.

A certificate of deposit is a written promise made and signed by the maker to pay a sum certain in money to the holder of the instrument.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces and the Law

The Constitution as the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environmental of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants' Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents' Estates and Trusts

Filters