Question 1

A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment. Should the drawer pay Sally?

Accepted Answer

A)  No, unless Joe Jones's name is crossed off. 
B)  No, unless "bearer" is handwritten. 
C)  Yes, since the word "or" is contained in the instrument, either Joe Jones or the bearer of the draft may obtain payment. 
D)  No, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones. 
A)  No, unless Joe Jones's name is crossed off. 
B)  No, unless "bearer" is handwritten. 
C)  Yes, since the word "or" is contained in the instrument, either Joe Jones or the bearer of the draft may obtain payment. 
D)  No, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones.

Question 2

Notes and certificates of deposit are orders to pay money.

Accepted Answer

A) True 
 B)False

Question 3

A signed promissory note stating "I promise to pay to Bonnie Ramcell $600 on December 15, 2020" is not covered by Article 3 of the UCC.

Accepted Answer

A) True 
 B)False

Question 4

Carol buys some items at the drugstore and writes a check to the store on her account at First Bank. Who is the drawee?

Accepted Answer

A)  Carol. 
B)  The drugstore. 
C)  First Bank. 
D)  The drugstore's bank. 
A)  Carol. 
B)  The drugstore. 
C)  First Bank. 
D)  The drugstore's bank.

Question 5

Postdating an instrument will not destroy its negotiability.

Accepted Answer

A) True 
 B)False

Question 6

Jones signed a 90-day note promising to pay $1,000 plus interest. The note states that interest is to be based on a variable, published rate external to the note. The sum the borrower must repay is uncertain, so the note is not negotiable under Revised Article 3.

Accepted Answer

A) True 
 B)False

Question 7

Who are the parties to checks and notes?

Accepted Answer

A check involves three parties. The draw

Question 8

To be negotiable, an instrument must be in writing.

Accepted Answer

A) True 
 B)False

Question 9

The vital importance of negotiable instruments and electronic transfers as methods of payment cannot be overstated.

Accepted Answer

A) True 
 B)False

Question 10

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.

Accepted Answer

A) True 
 B)False

Question 11

The court in Cooperative Centrale Raiffeisen-Boerenleenbank B.A. v. Bailey found:

Accepted Answer

A)  whether an instrument is negotiable is a question of fact. 
B)  whether an instrument is negotiable is to be determined without reference to the intent of the parties. 
C)  the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability. 
D)  the question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent. 
A)  whether an instrument is negotiable is a question of fact. 
B)  whether an instrument is negotiable is to be determined without reference to the intent of the parties. 
C)  the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability. 
D)  the question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent.

Question 12

A check is a draft payable on demand.

Accepted Answer

A) True 
 B)False

Question 13

Negotiable instruments:

Accepted Answer

A)  include drafts, promissory notes, assignments, and certificates of deposit. 
B)  are used primarily for smaller transactions. 
C)  in the form of checks have decreased in use since 2000. 
D)  have increased in usage to the point where they are now approximately equal to usage of cash for payments. 
A)  include drafts, promissory notes, assignments, and certificates of deposit. 
B)  are used primarily for smaller transactions. 
C)  in the form of checks have decreased in use since 2000. 
D)  have increased in usage to the point where they are now approximately equal to usage of cash for payments.

Question 14

Because they are easier to read, typewritten words supersede handwritten words contained in negotiable instruments.

Accepted Answer

A) True 
 B)False

Question 15

A promissory note is an instrument that involves three parties in three capacities.

Accepted Answer

A) True 
 B)False

Question 16

An instrument payable at a definite time is time paper.

Accepted Answer

A) True 
 B)False

Question 17

Would an instrument containing the following language be negotiable? "Harold T. Stone, as President, hereby promises to pay $12,348 to the order of Joe Jones Furniture for office equipment for Redtyn Corporation, payable from its corporate assets. (Signed) Harold T. Stone as President, Redtyn Corporation."

Accepted Answer

A)  No, because the promise refers to another contract. 
B)  No, because its payment is limited to a particular fund. 
C)  Yes, because Redtyn is a business entity. 
D)  Yes, because it meets all the requirements of negotiability. 
A)  No, because the promise refers to another contract. 
B)  No, because its payment is limited to a particular fund. 
C)  Yes, because Redtyn is a business entity. 
D)  Yes, because it meets all the requirements of negotiability.

Question 18

Identify which of the following meet the Article 3 negotiability requirement of being payable at a definite time: 
(a) A note payable "on or before June 14, 2021." 
(b) A dated instrument payable "30 days after date." 
(c) An undated instrument payable "30 days after date." 
(d) An instrument payable "when Baxter is promoted to plant manager." 
(e) A note payable on December 31, subject to acceleration by the holder." 
(f) A note granting the holder the option to extend maturity of the instrument for an indefinite period.

Accepted Answer

Illustrations (a), (b),
(e), and (f) are

Question 19

The person who signs a note and promises to pay it is the maker.

Accepted Answer

A) True 
 B)False

Question 20

An authorization to confess judgment on the instrument destroys its negotiability.

Accepted Answer

A) True 
 B)False

Exam 24: Form and Content

A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment. Should the drawer pay Sally?

Notes and certificates of deposit are orders to pay money.

A signed promissory note stating "I promise to pay to Bonnie Ramcell $600 on December 15, 2020" is not covered by Article 3 of the UCC.

Carol buys some items at the drugstore and writes a check to the store on her account at First Bank. Who is the drawee?

Postdating an instrument will not destroy its negotiability.

Jones signed a 90-day note promising to pay $1,000 plus interest. The note states that interest is to be based on a variable, published rate external to the note. The sum the borrower must repay is uncertain, so the note is not negotiable under Revised Article 3.

Who are the parties to checks and notes?

To be negotiable, an instrument must be in writing.

The vital importance of negotiable instruments and electronic transfers as methods of payment cannot be overstated.

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.

The court in Cooperative Centrale Raiffeisen-Boerenleenbank B.A. v. Bailey found:

A check is a draft payable on demand.

Negotiable instruments:

Because they are easier to read, typewritten words supersede handwritten words contained in negotiable instruments.

A promissory note is an instrument that involves three parties in three capacities.

An instrument payable at a definite time is time paper.

The person who signs a note and promises to pay it is the maker.

An authorization to confess judgment on the instrument destroys its negotiability.

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

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property Property Insurance Bailments and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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