Question 1

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 2

A promise or order is unconditional unless it states that:

Accepted Answer

A)  there is an express condition to payment. 
B)  rights or obligations concerning the order or promise are stated in another writing. 
C)  the promise or order is subject to or governed by another writing. 
D)  All of these. 
A)  there is an express condition to payment. 
B)  rights or obligations concerning the order or promise are stated in another writing. 
C)  the promise or order is subject to or governed by another writing. 
D)  All of these.

Question 3

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)  First Bank. 
B)  Carol. 
C)  The drugstore. 
D)  There is none. 
A)  First Bank. 
B)  Carol. 
C)  The drugstore. 
D)  There is none.

Question 4

Only a bank may serve as the maker of a certificate of a deposit.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

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

Question 6

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 7

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 8

Handwritten words supersede typewritten words contained in negotiable instruments.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

A promise or order is payable at a definite time if it is payable:

Accepted Answer

A)  at a definite period of time after sight or acceptance. 
B)  at a time readily ascertainable at the time the promise or order is issued. 
C)  at a fixed date or dates. 
D)  All of these. 
A)  at a definite period of time after sight or acceptance. 
B)  at a time readily ascertainable at the time the promise or order is issued. 
C)  at a fixed date or dates. 
D)  All of these.

Question 11

Elmore purchases goods from Grady, and Elmore executes and delivers a negotiable note to Grady for $1,200, payable to Grady's order in 30 days.Two weeks later, Grady negotiates the note to McDaniel.Which of the following is true?

Accepted Answer

A)  McDaniel can acquire no greater rights than Grady had in the note. 
B)  If the goods are defective, Elmore's defense will necessarily be available against McDaniel. 
C)  McDaniel is required to notify Elmore that he acquired the note. 
D)  Whether Elmore's defense is available against McDaniel will depend on whether McDaniel acquired the note in good faith and for value, had no knowledge of the defense, and took the note without reason to question its authenticity. 
A)  McDaniel can acquire no greater rights than Grady had in the note. 
B)  If the goods are defective, Elmore's defense will necessarily be available against McDaniel. 
C)  McDaniel is required to notify Elmore that he acquired the note. 
D)  Whether Elmore's defense is available against McDaniel will depend on whether McDaniel acquired the note in good faith and for value, had no knowledge of the defense, and took the note without reason to question its authenticity.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

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 15

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, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones. 
B)  No, unless Joe Jones's name is crossed off. 
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, unless "bearer" is handwritten. 
A)  No, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones. 
B)  No, unless Joe Jones's name is crossed off. 
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, unless "bearer" is handwritten.

Question 16

Jake signed and delivered a negotiable promissory note payable to Nancy.Nancy negotiated the note to Fred.Fred now has the same legal status as an assignee of a contract.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a negotiable instrument?

Accepted Answer

A)  A stock certificate. 
B)  A certificate of deposit. 
C)  A draft. 
D)  A check. 
A)  A stock certificate. 
B)  A certificate of deposit. 
C)  A draft. 
D)  A check.

Question 18

References to other agreements in negotiable instruments:

Accepted Answer

A)  destroy negotiability unless the recital makes the instrument subject to, or governed by, the terms of another agreement. 
B)  do not destroy negotiability in any circumstances. 
C)  do not destroy negotiability unless the recital makes the instrument subject to or governed by the terms of another agreement. 
D)  None of these. 
A)  destroy negotiability unless the recital makes the instrument subject to, or governed by, the terms of another agreement. 
B)  do not destroy negotiability in any circumstances. 
C)  do not destroy negotiability unless the recital makes the instrument subject to or governed by the terms of another agreement. 
D)  None of these.

Question 19

X signs a negotiable instrument ordering Y to pay Z the sum of $500.Y is the:

Accepted Answer

A)  drawer. 
B)  payee. 
C)  maker. 
D)  drawee. 
A)  drawer. 
B)  payee. 
C)  maker. 
D)  drawee.

Question 20

Which article of the UCC governs "negotiable instruments"?

Accepted Answer

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

Exam 24: Form and Content

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.

A promise or order is unconditional unless it states that:

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

Only a bank may serve as the maker of a certificate of a deposit.

All but which one of the following is required of 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.

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

Handwritten words supersede typewritten words contained in negotiable instruments.

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

A promise or order is payable at a definite time if it is payable:

Elmore purchases goods from Grady, and Elmore executes and delivers a negotiable note to Grady for $1,200, payable to Grady's order in 30 days.Two weeks later, Grady negotiates the note to McDaniel.Which of the following is true?

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

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.

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

Jake signed and delivered a negotiable promissory note payable to Nancy.Nancy negotiated the note to Fred.Fred now has the same legal status as an assignee of a contract.

Which of the following is not a negotiable instrument?

References to other agreements in negotiable instruments:

X signs a negotiable instrument ordering Y to pay Z the sum of $500.Y is the:

Which article of the UCC governs "negotiable instruments"?

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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