Question 1

Which of the following best describes an allonge?

Accepted Answer

A)  It is the right side of a check when looking at it from the front. 
B)  It is an indorsement consisting of signature of indorser. 
C)  It is the left side of a check when looking at it from the front. 
D)  It is a paper attached to an instrument. 
A)  It is the right side of a check when looking at it from the front. 
B)  It is an indorsement consisting of signature of indorser. 
C)  It is the left side of a check when looking at it from the front. 
D)  It is a paper attached to an instrument. D

Question 2

James wants to indorse a check to Janice, but wishes to rid himself from all further liabilities. Which of the following types of indorsements is James likely to use in this case?

Accepted Answer

A)  Special indorsement 
B)  Blank indorsement 
C)  Restrictive indorsement 
D)  Qualified indorsement 
A)  Special indorsement 
B)  Blank indorsement 
C)  Restrictive indorsement 
D)  Qualified indorsement D

Question 3

When a negotiable instrument is lost, this automatically discharges the obligation of the holder.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following best describes a restrictive indorsement?

Accepted Answer

A)  It is an indorsement that has the effect of qualifying, thus limiting, the liability of the indorser. 
B)  It is an indorsement that attempts to prevent the use of the instrument for anything except the stated use. 
C)  It is an indorsement that designates the particular person to whom payment should be made. 
D)  It is an indorsement having no words other than the name of the indorser. 
A)  It is an indorsement that has the effect of qualifying, thus limiting, the liability of the indorser. 
B)  It is an indorsement that attempts to prevent the use of the instrument for anything except the stated use. 
C)  It is an indorsement that designates the particular person to whom payment should be made. 
D)  It is an indorsement having no words other than the name of the indorser.

Question 5

A depository bank receiving a check with a restrictive indorsement, such as  "for deposit " must always honor the restriction.

Accepted Answer

A) True 
 B)False

Question 6

Negotiable instruments can be made payable to more than one person.

Accepted Answer

A) True 
 B)False

Question 7

Explain liabilities for payment of instrument.

Accepted Answer

By making an indorsement, an indorser, w

Question 8

Parties can be discharged from an obligation, if there has been the necessary lapse of time provided by a statute of limitations.

Accepted Answer

A) True 
 B)False

Question 9

A person who negotiates a bearer instrument by delivery alone, is liable to the immediate transferee as a warrantor of its validity.

Accepted Answer

A) True 
 B)False

Question 10

_____ is a unilateral act of a holder of an instrument, usually without consideration, whereby the holder gives up rights on the instrument.

Accepted Answer

A)  Refutation 
B)  Cancellation 
C)  Repudiation 
D)  Renunciation 
A)  Refutation 
B)  Cancellation 
C)  Repudiation 
D)  Renunciation

Question 11

The trailing edge is the right side of a check when looking at it from the front.

Accepted Answer

A) True 
 B)False

Question 12

The Uniform Commercial Code does not require an allonge to be attached to an instrument.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true of the obligation of negotiator of bearer paper?

Accepted Answer

A)  The negotiator is not liable to the immediate transferee as a warrantor of the genuineness of the instrument. 
B)  One who negotiates a bearer instrument by delivery alone does not guarantee payment. 
C)  The negotiator must indorse a bearer paper when he negotiates it. 
D)  The mere delivery by the negotiator of a bearer paper does not change title. 
A)  The negotiator is not liable to the immediate transferee as a warrantor of the genuineness of the instrument. 
B)  One who negotiates a bearer instrument by delivery alone does not guarantee payment. 
C)  The negotiator must indorse a bearer paper when he negotiates it. 
D)  The mere delivery by the negotiator of a bearer paper does not change title.

Question 14

A(n) _____ is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument.

Accepted Answer

A)  authorization 
B)  renunciation 
C)  indorsement 
D)  endorsement 
A)  authorization 
B)  renunciation 
C)  indorsement 
D)  endorsement

Question 15

A _____ indorsement designates the particular person to whom payment should be made.

Accepted Answer

A)  depository 
B)  blank 
C)  special 
D)  restrictive 
A)  depository 
B)  blank 
C)  special 
D)  restrictive

Question 16

Which of the following best describes cancellation?

Accepted Answer

A)  It is the act that indicates intention to destroy validity of an instrument. 
B)  It is the act of a third party refuting the rights of the holder of an instrument. 
C)  It is the act that indicates intention to physically destroy of an instrument. 
D)  It is the unilateral act of holder giving up rights in the instrument. 
A)  It is the act that indicates intention to destroy validity of an instrument. 
B)  It is the act of a third party refuting the rights of the holder of an instrument. 
C)  It is the act that indicates intention to physically destroy of an instrument. 
D)  It is the unilateral act of holder giving up rights in the instrument.

Question 17

The warranty liability of a qualified indorser is never the same as that of an unqualified indorser.

Accepted Answer

A) True 
 B)False

Question 18

A qualified indorser warrants that the signatures on the instrument are genuine.

Accepted Answer

A) True 
 B)False

Question 19

A cancellation made by mistake is not effective.

Accepted Answer

A) True 
 B)False

Question 20

A special endorsement is one having no words other than the name of the indorser.

Accepted Answer

A) True 
 B)False

Exam 23: Negotiation and Discharge

Which of the following best describes an allonge?

James wants to indorse a check to Janice, but wishes to rid himself from all further liabilities. Which of the following types of indorsements is James likely to use in this case?

When a negotiable instrument is lost, this automatically discharges the obligation of the holder.

Which of the following best describes a restrictive indorsement?

A depository bank receiving a check with a restrictive indorsement, such as "for deposit " must always honor the restriction.

Negotiable instruments can be made payable to more than one person.

Explain liabilities for payment of instrument.

Parties can be discharged from an obligation, if there has been the necessary lapse of time provided by a statute of limitations.

A person who negotiates a bearer instrument by delivery alone, is liable to the immediate transferee as a warrantor of its validity.

_____ is a unilateral act of a holder of an instrument, usually without consideration, whereby the holder gives up rights on the instrument.

The trailing edge is the right side of a check when looking at it from the front.

The Uniform Commercial Code does not require an allonge to be attached to an instrument.

Which of the following is true of the obligation of negotiator of bearer paper?

A(n) _____ is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument.

A _____ indorsement designates the particular person to whom payment should be made.

Which of the following best describes cancellation?

The warranty liability of a qualified indorser is never the same as that of an unqualified indorser.

A qualified indorser warrants that the signatures on the instrument are genuine.

A cancellation made by mistake is not effective.

A special endorsement is one having no words other than the name of the indorser.

Introduction to Law

Courts and Court Procedure

Business Torts and Crimes

Government Regulation of Business

Nature and Classes of Contracts

Offer and Acceptance

Capacity to Contract

Consideration

Defective Agreements

Illegal Agreements

Written Contracts

Third Parties and Contracts

Termination of Contracts

Nature of Personal Property

Special Bailments

Sales of Personal Property

Formalities of a Sale

Transfer of Title and Risk in Sales Con

Warranties, Product Liability, and Cons

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Liabilities of Parties and Holders in Due Course

Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Labor Legislation

Introduction to Business Organization

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corpora

Principles of Insurance

Types of Insurance

Security Devices

Bankruptcy

Nature of Real Property

Transfer of Real Property

Real Estate Mortgages

Landlord and Tenant

Wills, Inheritances, and Trusts

Filters