Question 1

Where should a check be indorsed?

Accepted Answer

A) on the back along the trailing edge 
B) underneath the drawer's signature 
C) anywhere there is room on the instrument 
D) on a paper attached to the instrument 
A) on the back along the trailing edge 
B) underneath the drawer's signature 
C) anywhere there is room on the instrument 
D) on a paper attached to the instrument A

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

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  True

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

For what does an indorser of a negotiable instrument become liable?

Accepted Answer

A) payment of the face amount and certain warranties 
B) stated interest payable from the date of the indorsement 
C) nothing; only the maker of an instrument is liable 
D) any amounts not paid by the indorser's own bank 
A) payment of the face amount and certain warranties 
B) stated interest payable from the date of the indorsement 
C) nothing; only the maker of an instrument is liable 
D) any amounts not paid by the indorser's own bank

Question 6

A cancellation made by mistake is not effective.

Accepted Answer

A) True 
 B)False

Question 7

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 8

An instrument made payable to more than one person is not negotiable.

Accepted Answer

A) True 
 B)False

Question 9

A qualified indorsermakes no warranties regarding the instrument.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is true regarding the 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 13

Explain liabilities for payment of instrument

Accepted Answer

By making an indorsement, an indorser, w

Question 14

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 15

Parties can be discharged from an obligation by a discharge of their debts in bankruptcy.

Accepted Answer

A) True 
 B)False

Question 16

Delivery of a bearer instrument is sufficient to pass title.

Accepted Answer

A) True 
 B)False

Question 17

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

Accepted Answer

A) True 
 B)False

Question 18

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 19

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 20

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

Accepted Answer

A) True 
 B)False

Exam 23: Negotiation and Discharge

Where should a check be indorsed?

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?

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

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

For what does an indorser of a negotiable instrument become liable?

A cancellation made by mistake is not effective.

Which of the following best describes a restrictive indorsement?

An instrument made payable to more than one person is not negotiable.

A qualified indorsermakes no warranties regarding the instrument.

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

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

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

Explain liabilities for payment of instrument

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

Parties can be discharged from an obligation by a discharge of their debts in bankruptcy.

Delivery of a bearer instrument is sufficient to pass title.

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

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

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. ​

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

Introduction to Law

Courts and Court Procedures

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 Contracts

Warranties Product Liability and Consumer Protection

Nature of Negotiable Instruments

Essentials of Negotiability

Promissory Notes and Drafts

Liabilities of Parties, Holders in Due Course and Defenses

Nature and Creation of an Agency

Operation and Termination of an Agency

Employer and Employee Relations

Employees Rights

Introduction to Business Organizations

Creation and Operation of a Partnership

Dissolution of a Partnership

Nature of a Corporation

Ownership of a Corporation

Management and Dissolution of a Corporation

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 Trust

Filters

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.