Question 1

Who are the parties to checks and notes?

Accepted Answer

A check involves three parties.The drawer of a check is the person who issues it.The drawee is the party who is ordered to pay a fixed amount of money to the payee .In the case of a check, the drawee is a bank.A note involves two parties: the maker , who promises to pay, and the payee , the person to whose order the instrument is made payable.

Question 2

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

Accepted Answer

A) True 
 B)False  False

Question 3

The drawee is the individual who signs a check and promises to pay.

Accepted Answer

A) True 
 B)False  False

Question 4

To be negotiable, an instrument must be in writing.

Accepted Answer

A) True 
 B)False

Question 5

Negotiability is wholly a matter of form.

Accepted Answer

A) True 
 B)False

Question 6

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 7

To have the full benefit of negotiability, negotiable instruments must:

Accepted Answer

A)  meet the requirements of negotiability. 
B)  meet the requirements of negotiability and be acquired by a party who notified the maker or drawer of the transfer. 
C)  be acquired by a holder in due course. 
D)  Both meet the requirements of negotiability  and also  be acquired by a holder in due course. 
A)  meet the requirements of negotiability. 
B)  meet the requirements of negotiability and be acquired by a party who notified the maker or drawer of the transfer. 
C)  be acquired by a holder in due course. 
D)  Both meet the requirements of negotiability  and also  be acquired by a holder in due course.

Question 8

To be negotiable, the instrument must satisfy all except which one of the following requirements?

Accepted Answer

A)  It must be for a certain amount. 
B)  It must be signed. 
C)  It must be payable on demand. 
D)  It must contain a promise or order to pay. 
A)  It must be for a certain amount. 
B)  It must be signed. 
C)  It must be payable on demand. 
D)  It must contain a promise or order to pay.

Question 9

A cashier's check is a check drawn by a bank upon itself to the order of a named payee.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following notes would not be negotiable? A written, signed promise to pay:

Accepted Answer

A)  $50,000 to the order of Crouch, and the maker of the note orally stated to Crouch that the money would only be paid if all contractual specifications were met. 
B)  $500 and a rick of firewood on or before September 10. 
C)  which includes a statement that, "This note is given in partial payment for a piano to be delivered in one week from date in accordance with a contract of this date between the maker and the payee." 
D)  All of these. 
A)  $50,000 to the order of Crouch, and the maker of the note orally stated to Crouch that the money would only be paid if all contractual specifications were met. 
B)  $500 and a rick of firewood on or before September 10. 
C)  which includes a statement that, "This note is given in partial payment for a piano to be delivered in one week from date in accordance with a contract of this date between the maker and the payee." 
D)  All of these.

Question 11

Bill's car broke down on a dark, rainy night.Along came Andy in his service station's four-wheel drive truck with tools and supplies in the back.Bill didn't have any credit cards and only $3.25 cash, so Andy told him to write a check or an IOU.Neither Andy nor Bill had any paper, so Bill wrote on the cover of Andy's lunchbox: "If my car is fixed right by Andy Walcott, I will pay him $150.(Signed) Bill Boyd." Andy indorses the note and takes it to a commercial factor for negotiation.The factor refuses, saying it is non-negotiable because it:

Accepted Answer

A)  is written on a lunchbox. 
B)  mentions the existence of a contract to repair the car. 
C)  is conditional on satisfactory repair of the car. 
D)  All of these. 
E)  None of these. 
A)  is written on a lunchbox. 
B)  mentions the existence of a contract to repair the car. 
C)  is conditional on satisfactory repair of the car. 
D)  All of these. 
E)  None of these.

Question 12

A provision in a promissory note payable one year from its date that the maker may extend the maturity date six months impairs the note's negotiability.

Accepted Answer

A) True 
 B)False

Question 13

Carlos wrote a check with the numbers $4500 and the written amount as forty-five dollars.Explain how the ambiguity will be resolved.

Accepted Answer

The check would be interpreted to be for

Question 14

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

Question 15

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

Question 16

Which of the following would be a bearer instrument?

Accepted Answer

A)  A check payable to "cash." 
B)  A check that says "pay to the order of John Jones." 
C)  A check that says "pay to the order of bearer." 
D)  A check payable to "cash" or a   check that says "pay to the order of bearer." 
A)  A check payable to "cash." 
B)  A check that says "pay to the order of John Jones." 
C)  A check that says "pay to the order of bearer." 
D)  A check payable to "cash" or a   check that says "pay to the order of bearer."

Question 17

If Sam writes a check drawn on his account at First Bank to State University to pay his tuition:

Accepted Answer

A)  Sam is the maker. 
B)  the university is the drawee. 
C)  the bank is the payee. 
D)  Sam is the drawer. 
A)  Sam is the maker. 
B)  the university is the drawee. 
C)  the bank is the payee. 
D)  Sam is the drawer.

Question 18

Expain whether each of the following would be negotiable or not negotiable.
a.A check with the amount payable omitted.
b.A draft for 3,000 bushels of corn.
c.A check written in pencil on a paper towel.
d.A note stating that it is secured by a mortgage on a specified parcel of land.
e.A note stating "IOU fifty dollars."

Accepted Answer

a.The incomplete check is not negotiable

Question 19

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

Question 20

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 question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent. 
D)  the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability. 
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 question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent. 
D)  the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability.

Exam 24: Form and Content

Who are the parties to checks and notes?

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

The drawee is the individual who signs a check and promises to pay.

To be negotiable, an instrument must be in writing.

Negotiability is wholly a matter of form.

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

To have the full benefit of negotiability, negotiable instruments must:

To be negotiable, the instrument must satisfy all except which one of the following requirements?

A cashier's check is a check drawn by a bank upon itself to the order of a named payee.

Which of the following notes would not be negotiable? A written, signed promise to pay:

A provision in a promissory note payable one year from its date that the maker may extend the maturity date six months impairs the note's negotiability.

Carlos wrote a check with the numbers $4500 and the written amount as forty-five dollars.Explain how the ambiguity will be resolved.

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?

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

Which of the following would be a bearer instrument?

If Sam writes a check drawn on his account at First Bank to State University to pay his tuition:

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

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

Introduction to Law

Business Ethicspart Ii: the Legal Environment of Business

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Negligence and Strict Liabilitypart Iii: Contracts

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 Remediespart Iv: Sales

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remediespart V: Negotiable Instruments

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transferspart Vi: Agency

Relationship of Principal and Agent

Relationship With Third Partiespart Vii: Business Associations

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 Corporationspart Viii: Debtor and Creditor Relations

Secured Transactions and Suretyship

Bankruptcypart Ix: Regulation of Business

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

International Business Lawpart X: Property

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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