Question 1

A reference in a negotiable instrument to the existence of a separate agreement to which it is subject destroys the negotiability of the instrument.

Accepted Answer

A) True 
 B)False  True

Question 2

Under the Check 21 Act:

Accepted Answer

A)  banks must accept checks in electronic form. 
B)  banks are permitted to truncate original checks and process check information electronically. 
C)  banks must create substitute checks which are the legal equivalent of the original checks. 
D)  banks must keep the paper checks on file for 90 days. 
A)  banks must accept checks in electronic form. 
B)  banks are permitted to truncate original checks and process check information electronically. 
C)  banks must create substitute checks which are the legal equivalent of the original checks. 
D)  banks must keep the paper checks on file for 90 days. B

Question 3

Distinguish between a note and a certificate of deposit. How are they alike? How are they different? Explain your answer.

Accepted Answer

Notes and CD's are two-party instruments involving a maker and a payee. They are alike in that in each case one party promises to pay the other party money. They are different in that with a certificate of deposit, a bank is receiving money, acknowledging it, and promising to repay it. A CD is a specialized form of promissory note.

Question 4

The Revised Article 3 of the UCC provides that a check which meets all requirements of being a negotiable instrument, except that it is not payable to bearer or order, is nevertheless a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 5

Negotiability invests negotiable instruments with a high degree of marketability and commercial utility by allowing them to be freely transferable and enforceable by a person with the rights of a holder in due course against a person obligated on the instrument.

Accepted Answer

A) True 
 B)False

Question 6

Revised Article 1 of the UCC states that the "money" requirement for a negotiable instrument means the current official currency of the government, not just a medium of exchange authorized or adopted by a sovereign government as part of its currency.

Accepted Answer

A) True 
 B)False

Question 7

A __________ is a specialized form of promise to pay money given by a maker in which the bank is the maker.

Accepted Answer

A)  note 
B)  certificate of deposit 
C)  trade acceptance 
D)  cashier's check 
A)  note 
B)  certificate of deposit 
C)  trade acceptance 
D)  cashier's check

Question 8

A certificate of deposit differs from a promissory note in that:

Accepted Answer

A)  the maker is always a bank. 
B)  there are three parties to the transaction. 
C)  the payee of a CD must be paid on demand. 
D)  the maker can be a bank  or an individual. 
A)  the maker is always a bank. 
B)  there are three parties to the transaction. 
C)  the payee of a CD must be paid on demand. 
D)  the maker can be a bank  or an individual.

Question 9

A draft involves three parties: a drawer, a drawee, and a payee.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following has been held to destroy the negotiability of an instrument and to render its transfer a contractual assignment?

Accepted Answer

A)  "I wish you would pay." 
B)  "Pay to the order of John Jones." 
C)  "Pay bearer." 
D)  "Please pay Sue Smith." 
A)  "I wish you would pay." 
B)  "Pay to the order of John Jones." 
C)  "Pay bearer." 
D)  "Please pay Sue Smith."

Question 11

Which of the following would be an unconditional promise or order to pay?

Accepted Answer

A)  "I hereby acknowledge my debt to John Jones." 
B)  "I hereby promise to pay $2,000 to John Jones provided the lawn tractor sold meets the contractual specifications." 
C)  "Pay to the order of bearer ten dollars." 
D)  "IOU fifty dollars." 
A)  "I hereby acknowledge my debt to John Jones." 
B)  "I hereby promise to pay $2,000 to John Jones provided the lawn tractor sold meets the contractual specifications." 
C)  "Pay to the order of bearer ten dollars." 
D)  "IOU fifty dollars."

Question 12

An "X" or a thumbprint could constitute a signature within the meaning of the term in the Code.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following will destroy negotiability?

Accepted Answer

A)  Making the instrument subject to the terms of another agreement. 
B)  Making the instrument payable in Japanese yen. 
C)  Signing a check in pencil. 
D)  Signing a check with an "X." 
A)  Making the instrument subject to the terms of another agreement. 
B)  Making the instrument payable in Japanese yen. 
C)  Signing a check in pencil. 
D)  Signing a check with an "X."

Question 14

Explain the effect that a reference to other agreements has on negotiable instruments and the difference between a mere reference and a negotiable instrument's being subject to the terms of another agreement.

Accepted Answer

A reference to the mere existence of ano

Question 15

Bill goes to First Bank to get a loan. He signs a note and agrees to repay the bank. What is the legal term for Bill's status regarding the note?

Accepted Answer

A)  Payee. 
B)  Maker. 
C)  Payor. 
D)  Drawer. 
A)  Payee. 
B)  Maker. 
C)  Payor. 
D)  Drawer.

Question 16

All but which one of the following is required of a negotiable instrument?

Accepted Answer

A)  It must be payable only out of a particular fund. 
B)  It must contain an unconditional promise or order to pay a fixed amount in money. 
C)  It must be payable on demand or at a definite future date. 
D)  It must be in writing and signed by the maker or drawer. 
A)  It must be payable only out of a particular fund. 
B)  It must contain an unconditional promise or order to pay a fixed amount in money. 
C)  It must be payable on demand or at a definite future date. 
D)  It must be in writing and signed by the maker or drawer.

Question 17

Which article of the UCC governs "negotiable instruments"?

Accepted Answer

A)  Article 6. 
B)  Article 2. 
C)  Article 3. 
D)  Article 9. 
A)  Article 6. 
B)  Article 2. 
C)  Article 3. 
D)  Article 9.

Question 18

An incomplete instrument is not negotiable. However, when it is completed, it may become negotiable.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following does not fulfill the requirements of being payable to bearer according to t he UCC?

Accepted Answer

A)  states it is payable to bearer or the order of bearer. 
B)  does not state a payee. 
C)  states it is payable to "cash" or to the order of "cash." 
D)  the payee's name is spelled wrong. 
A)  states it is payable to bearer or the order of bearer. 
B)  does not state a payee. 
C)  states it is payable to "cash" or to the order of "cash." 
D)  the payee's name is spelled wrong.

Question 20

Revised Article 3 eliminates the particular fund doctrine by providing that a promise or order is not made conditional because payment is to be made only out of a particular fund.

Accepted Answer

A) True 
 B)False

Exam 24: Form and Content

A reference in a negotiable instrument to the existence of a separate agreement to which it is subject destroys the negotiability of the instrument.

Under the Check 21 Act:

Distinguish between a note and a certificate of deposit. How are they alike? How are they different? Explain your answer.

The Revised Article 3 of the UCC provides that a check which meets all requirements of being a negotiable instrument, except that it is not payable to bearer or order, is nevertheless a negotiable instrument.

Negotiability invests negotiable instruments with a high degree of marketability and commercial utility by allowing them to be freely transferable and enforceable by a person with the rights of a holder in due course against a person obligated on the instrument.

Revised Article 1 of the UCC states that the "money" requirement for a negotiable instrument means the current official currency of the government, not just a medium of exchange authorized or adopted by a sovereign government as part of its currency.

A __________ is a specialized form of promise to pay money given by a maker in which the bank is the maker.

A certificate of deposit differs from a promissory note in that:

A draft involves three parties: a drawer, a drawee, and a payee.

Which of the following has been held to destroy the negotiability of an instrument and to render its transfer a contractual assignment?

Which of the following would be an unconditional promise or order to pay?

An "X" or a thumbprint could constitute a signature within the meaning of the term in the Code.

Which of the following will destroy negotiability?

Explain the effect that a reference to other agreements has on negotiable instruments and the difference between a mere reference and a negotiable instrument's being subject to the terms of another agreement.

Bill goes to First Bank to get a loan. He signs a note and agrees to repay the bank. What is the legal term for Bill's status regarding the note?

All but which one of the following is required of a negotiable instrument?

Which article of the UCC governs "negotiable instruments"?

An incomplete instrument is not negotiable. However, when it is completed, it may become negotiable.

Which of the following does not fulfill the requirements of being payable to bearer according to t he UCC?

Revised Article 3 eliminates the particular fund doctrine by providing that a promise or order is not made conditional because payment is to be made only out of a particular fund.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance Breach and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability Warranties and Strict Liability

Sales Remedies

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits Collections and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

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Accountants Legal Liability

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International Business Law

Introduction to Property Property Insurance Bailments and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

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