Question 1

Under Revised Article 3 of the UCC, failure to give notice of dishonor will discharge the drawer from having to pay on the instrument.

Accepted Answer

A) True 
 B)False

Question 2

Conversion of an instrument will occur if:

Accepted Answer

A)  a bank cashes a check with a forged indorsement. 
B)  a bank refuses to return a canceled check. 
C)  a bank takes a check from another bank. 
D)  an indorser gives a check to the bank. 
A)  a bank cashes a check with a forged indorsement. 
B)  a bank refuses to return a canceled check. 
C)  a bank takes a check from another bank. 
D)  an indorser gives a check to the bank.

Question 3

In which of the following situations has conversion NOT occurred?

Accepted Answer

A)  When an instrument is paid on a forged indorsement. 
B)  When a drawee to whom a draft is delivered for acceptance properly returns it upon request. 
C)  When any person to whom an instrument is delivered for payment refuses on demand to pay or to return it. 
D)  When a bank pays an instrument containing only one of two required indorsements. 
A)  When an instrument is paid on a forged indorsement. 
B)  When a drawee to whom a draft is delivered for acceptance properly returns it upon request. 
C)  When any person to whom an instrument is delivered for payment refuses on demand to pay or to return it. 
D)  When a bank pays an instrument containing only one of two required indorsements.

Question 4

What is the difference between the liability of a qualified indorser and an unqualified indorser? Does the fact that a person has given a qualified indorsement mean that the person has no liability? Explain.

Accepted Answer

A qualified indorser's contractual liabi

Question 5

A drawee bank is primarily liable after it accepts the check.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true of warranty liability as it affects negotiable instruments?

Accepted Answer

A)  Warranty liability applies to any persons who transfer an instrument and receive consideration. 
B)  A drawee of an unaccepted draft who pays in good faith receives a presentment warranty from the person obtaining payment and from all prior transferors of the draft. 
C)  A drawee who accepts an instrument in good faith receives a presentment warranty from the person obtaining acceptance that the draft has not been altered. 
D)  All of these statement are true of warranty liability. 
A)  Warranty liability applies to any persons who transfer an instrument and receive consideration. 
B)  A drawee of an unaccepted draft who pays in good faith receives a presentment warranty from the person obtaining payment and from all prior transferors of the draft. 
C)  A drawee who accepts an instrument in good faith receives a presentment warranty from the person obtaining acceptance that the draft has not been altered. 
D)  All of these statement are true of warranty liability.

Question 7

On the due date, Merrel makes proper tender of full payment of a note to Russell, who is entitled to payment. If Russell refuses payment, Merrel is discharged from liability for:

Accepted Answer

A)  the face amount of the note. 
B)  any interest accrued until the time of tender. 
C)  interest after the due date. 
D)  all repercussions from this transaction. 
A)  the face amount of the note. 
B)  any interest accrued until the time of tender. 
C)  interest after the due date. 
D)  all repercussions from this transaction.

Question 8

A signature may be made by an individual herself or by an authorized agent.

Accepted Answer

A) True 
 B)False

Question 9

Mark gives a bearer note for $50 to Joe in exchange for an excellent dinner at Joe's restaurant. Joe delivers the note to Sue for $50 and Sue takes it to Mark to be paid. If Mark says the note was originally written for only $5, what can Sue do?

Accepted Answer

A)  Hold Joe liable for breach of warranty. 
B)  Get $50 from Mark. 
C)  Hold Joe liable for breach of contract. 
D)  Only get $5 from Mark. 
A)  Hold Joe liable for breach of warranty. 
B)  Get $50 from Mark. 
C)  Hold Joe liable for breach of contract. 
D)  Only get $5 from Mark.

Question 10

The drawer is obligated to pay the draft only if the drawee fails to pay the instrument.

Accepted Answer

A) True 
 B)False

Question 11

The time for dishonor of a check can vary greatly depending on the number of banks involved in the collection process.

Accepted Answer

A) True 
 B)False

Question 12

The use of the qualifying word(s) __________ is/are understood to place purchasers on notice that they may not rely on the credit of the person using this language.

Accepted Answer

A)  "Accepted" 
B)  "Certified" 
C)  "Without recourse" 
D)  "Insufficient funds" 
A)  "Accepted" 
B)  "Certified" 
C)  "Without recourse" 
D)  "Insufficient funds"

Question 13

The maker is the primary party on every note.

Accepted Answer

A) True 
 B)False

Question 14

Parties that are usually secondarily liable for an instrument are:

Accepted Answer

A)  indorsers and drawers. 
B)  makers and indorsers. 
C)  makers and acceptors. 
D)  acceptors and drawers. 
A)  indorsers and drawers. 
B)  makers and indorsers. 
C)  makers and acceptors. 
D)  acceptors and drawers.

Question 15

All people who obtain payment or acceptance of an instrument as well as all prior transferors give the presenter's warranties.

Accepted Answer

A) True 
 B)False

Question 16

Warranty liability applies to persons who:

Accepted Answer

A)  transfer an instrument. 
B)  obtain payment or acceptance of an instrument. 
C)  have signed the instrument, but not on those who have not signed. 
D)  Both  transfer an instrument  and  obtain payment or acceptance of an instrument  are correct. 
A)  transfer an instrument. 
B)  obtain payment or acceptance of an instrument. 
C)  have signed the instrument, but not on those who have not signed. 
D)  Both  transfer an instrument  and  obtain payment or acceptance of an instrument  are correct.

Question 17

By paying the holder on an instrument, a party may be discharged from liability.

Accepted Answer

A) True 
 B)False

Question 18

To certify a check, the bank must:

Accepted Answer

A)  tell the one who presents it. 
B)  send a letter to the drawer. 
C)  write the acceptance on the check. 
D)  Any of these will be sufficient. 
A)  tell the one who presents it. 
B)  send a letter to the drawer. 
C)  write the acceptance on the check. 
D)  Any of these will be sufficient.

Question 19

Any kind of notice of dishonor that informs the recipient of potential liability is sufficient.

Accepted Answer

A) True 
 B)False

Question 20

Discuss the effect of an unauthorized signature on an instrument.

Accepted Answer

Unauthorized signatures include both for

Exam 26: Liability of Parties

Under Revised Article 3 of the UCC, failure to give notice of dishonor will discharge the drawer from having to pay on the instrument.

Conversion of an instrument will occur if:

In which of the following situations has conversion NOT occurred?

What is the difference between the liability of a qualified indorser and an unqualified indorser? Does the fact that a person has given a qualified indorsement mean that the person has no liability? Explain.

A drawee bank is primarily liable after it accepts the check.

Which of the following is true of warranty liability as it affects negotiable instruments?

On the due date, Merrel makes proper tender of full payment of a note to Russell, who is entitled to payment. If Russell refuses payment, Merrel is discharged from liability for:

A signature may be made by an individual herself or by an authorized agent.

Mark gives a bearer note for $50 to Joe in exchange for an excellent dinner at Joe's restaurant. Joe delivers the note to Sue for $50 and Sue takes it to Mark to be paid. If Mark says the note was originally written for only $5, what can Sue do?

The drawer is obligated to pay the draft only if the drawee fails to pay the instrument.

The time for dishonor of a check can vary greatly depending on the number of banks involved in the collection process.

The use of the qualifying word(s) __________ is/are understood to place purchasers on notice that they may not rely on the credit of the person using this language.

The maker is the primary party on every note.

Parties that are usually secondarily liable for an instrument are:

All people who obtain payment or acceptance of an instrument as well as all prior transferors give the presenter's warranties.

Warranty liability applies to persons who:

By paying the holder on an instrument, a party may be discharged from liability.

To certify a check, the bank must:

Any kind of notice of dishonor that informs the recipient of potential liability is sufficient.

Discuss the effect of an unauthorized signature on an instrument.

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

Form and Content

Transfer and Holder in Due Course

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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