Question 1

All holders are subject to the defense that a discharge in bankruptcy has been granted.

Accepted Answer

A) True 
 B)False  True

Question 2

James agreed to remodel Ryan's house for a specified fee. However, James failed to complete the job properly and Ryan refused to pay him. James had previously assigned the right to payment to Blake. Which of the following is legally permissible in this scenario?

Accepted Answer

A)  Blake and James can jointly claim payment from Ryan. 
B)  James can claim compensation through a court of law. 
C)  Ryan can claim contract breach and refuse payment to Blake. 
D)  Blake can claim payment as he did not breach any specific contract. 
A)  Blake and James can jointly claim payment from Ryan. 
B)  James can claim compensation through a court of law. 
C)  Ryan can claim contract breach and refuse payment to Blake. 
D)  Blake can claim payment as he did not breach any specific contract. C

Question 3

Joyce gives a check to Chris, a minor, in order to give it to James. However, Chris loses the check. Which of the following is likely to occur in this scenario?

Accepted Answer

A)  Joyce can ask James to claim compensation from Chris. 
B)  Joyce must re-issue another check toward James as a contract with Chris is invalid. 
C)  Joyce can withhold payment to James, as she has already issued a valid check through Chris. 
D)  Joyce can claim compensation from Chris for losing the check. 
A)  Joyce can ask James to claim compensation from Chris. 
B)  Joyce must re-issue another check toward James as a contract with Chris is invalid. 
C)  Joyce can withhold payment to James, as she has already issued a valid check through Chris. 
D)  Joyce can claim compensation from Chris for losing the check. B

Question 4

When the duress nullifies a contract, the defense is limited.

Accepted Answer

A) True 
 B)False

Question 5

When an alteration is fraudulently made, the party whose obligation is affected by the alteration is discharged.

Accepted Answer

A) True 
 B)False

Question 6

A thief can pass good title of an instrument to a holder in due course.

Accepted Answer

A) True 
 B)False

Question 7

Even in cases in which the defendant's negligence made the forgery possible, forgery may be raised successfully against any holder.

Accepted Answer

A) True 
 B)False

Question 8

Mike makes out a check to Vin's name and delivers it to Ben. However, Mike asks Ben to hold onto to the check until he receives goods from Vin, but Ben delivers it to Vin who then refuses to supply the goods. Which of the following is likely to occur in this case?

Accepted Answer

A)  Ben can be sued by Mike for breaking his trust. 
B)  Mike is liable to pay the check despite not receiving the goods. 
C)  Mike can reclaim the check from Vin through a court of law. 
D)  Vin is entitled to deposit the check and keep the goods with him. 
A)  Ben can be sued by Mike for breaking his trust. 
B)  Mike is liable to pay the check despite not receiving the goods. 
C)  Mike can reclaim the check from Vin through a court of law. 
D)  Vin is entitled to deposit the check and keep the goods with him.

Question 9

Which of the following best describes alteration?

Accepted Answer

A)  It is an authorized change in an instrument that does not necessarily modify the obligation of a party. 
B)  It is an authorized change in an instrument that is done during the process of theft. 
C)  It is an unauthorized change in an instrument that purports to modify in any respect the obligation of a party. 
D)  It is an authorized change in an instrument that is done under duress. 
A)  It is an authorized change in an instrument that does not necessarily modify the obligation of a party. 
B)  It is an authorized change in an instrument that is done during the process of theft. 
C)  It is an unauthorized change in an instrument that purports to modify in any respect the obligation of a party. 
D)  It is an authorized change in an instrument that is done under duress.

Question 10

A defense that cannot be used against a holder in due course is known as a _____.

Accepted Answer

A)  limited defense 
B)  conditional defense 
C)  universal defense 
D)  common defense 
A)  limited defense 
B)  conditional defense 
C)  universal defense 
D)  common defense

Question 11

Which of the following is legally permissible in the case of a theft of a negotiable instrument?

Accepted Answer

A)  A thief can require payment of a stolen paper. 
B)  A holder can declare the instrument to be void. 
C)  A thief can pass on the title to the person the paper was made out to. 
D)  An ordinary holder can require payment of the instrument. 
A)  A thief can require payment of a stolen paper. 
B)  A holder can declare the instrument to be void. 
C)  A thief can pass on the title to the person the paper was made out to. 
D)  An ordinary holder can require payment of the instrument.

Question 12

Those defenses thought to be so important that they are preserved even against a holder in due course are called real.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a scenario where a universal defense can be applied?

Accepted Answer

A)  A is induced to execute a commercial paper wrongly through misrepresentation. 
B)  A delivers a check to B, who is a minor, and he loses it. 
C)  A and B are engaged in a dispute over a contract and a third party is involved. 
D)  A delivers a check to B with a condition not to deliver it to C, but B delivers it anyway. 
A)  A is induced to execute a commercial paper wrongly through misrepresentation. 
B)  A delivers a check to B, who is a minor, and he loses it. 
C)  A and B are engaged in a dispute over a contract and a third party is involved. 
D)  A delivers a check to B with a condition not to deliver it to C, but B delivers it anyway.

Question 14

When a person knowingly executes a negotiable instrument but is persuaded to do so because of false statements, the defense is a limited one.

Accepted Answer

A) True 
 B)False

Question 15

Explain any two types of hybrid defenses.

Accepted Answer

Several defenses may be either universal

Question 16

In general, the defenses available in a dispute over a contract can be raised against holders in due course.

Accepted Answer

A) True 
 B)False

Question 17

A limited defense can be used against a holder in due course.

Accepted Answer

A) True 
 B)False

Question 18

Minority is not a defense that can be preserved even against a holder in due course.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a definition of a universal defense?

Accepted Answer

A)  It is a defense that can be used only against a holder in due course. 
B)  It is a defense that cannot be used against a holder in due course. 
C)  It is a defense that can be used only against the first holder. 
D)  It is a defense that can be used against any holder. 
A)  It is a defense that can be used only against a holder in due course. 
B)  It is a defense that cannot be used against a holder in due course. 
C)  It is a defense that can be used only against the first holder. 
D)  It is a defense that can be used against any holder.

Question 20

When a person knows commercial paper is being executed but is induced to execute it because of false representations,  this is a defense against a holder in due course.

Accepted Answer

A) True 
 B)False

Exam 25: Defenses

All holders are subject to the defense that a discharge in bankruptcy has been granted.

James agreed to remodel Ryan's house for a specified fee. However, James failed to complete the job properly and Ryan refused to pay him. James had previously assigned the right to payment to Blake. Which of the following is legally permissible in this scenario?

Joyce gives a check to Chris, a minor, in order to give it to James. However, Chris loses the check. Which of the following is likely to occur in this scenario?

When the duress nullifies a contract, the defense is limited.

When an alteration is fraudulently made, the party whose obligation is affected by the alteration is discharged.

A thief can pass good title of an instrument to a holder in due course.

Even in cases in which the defendant's negligence made the forgery possible, forgery may be raised successfully against any holder.

Mike makes out a check to Vin's name and delivers it to Ben. However, Mike asks Ben to hold onto to the check until he receives goods from Vin, but Ben delivers it to Vin who then refuses to supply the goods. Which of the following is likely to occur in this case?

Which of the following best describes alteration?

A defense that cannot be used against a holder in due course is known as a _____.

Which of the following is legally permissible in the case of a theft of a negotiable instrument?

Those defenses thought to be so important that they are preserved even against a holder in due course are called real.

Which of the following is a scenario where a universal defense can be applied?

When a person knowingly executes a negotiable instrument but is persuaded to do so because of false statements, the defense is a limited one.

Explain any two types of hybrid defenses.

In general, the defenses available in a dispute over a contract can be raised against holders in due course.

A limited defense can be used against a holder in due course.

Minority is not a defense that can be preserved even against a holder in due course.

Which of the following is a definition of a universal defense?

When a person knows commercial paper is being executed but is induced to execute it because of false representations, this is a defense against a holder in due course.

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

Negotiation and Discharge

Liabilities of Parties and Holders in Due Course

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