Question 1

Discuss the effect of an unauthorized signature on an instrument.

Accepted Answer

Unauthorized signatures include both for

Question 2

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

Question 3

Checks, when presented, are automatically certified.

Accepted Answer

A) True 
 B)False

Question 4

Primary liability does not apply to issuers of cashier's checks.

Accepted Answer

A) True 
 B)False

Question 5

Molly makes a note payable to the order of Patrick; Patrick indorses it to Amy; Amy indorses it to Blake; and Blake indorses it to Homer.Homer presents the note to Molly within a reasonable time, but she refuses to pay.If Homer notifies only Patrick of the dishonor, Amy and Blake are discharged from liability.

Accepted Answer

A) True 
 B)False

Question 6

Bob took a check written by Jack to Jack's bank to be certified.The bank stamped "Certified" on it and gave it back to Bob.What consequence?

Accepted Answer

A)  Bob can only demand the money from Jack. 
B)  Bob can only demand the money from the bank. 
C)  Bob would have to pay if the bank doesn't. 
D)  The bank would have to pay if Jack doesn't. 
A)  Bob can only demand the money from Jack. 
B)  Bob can only demand the money from the bank. 
C)  Bob would have to pay if the bank doesn't. 
D)  The bank would have to pay if Jack doesn't.

Question 7

Conversion of an instrument will occur if:

Accepted Answer

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

Question 8

The signature of the maker of a note may be typewritten or signed by means of a signature stamp so long as it represents a present intention to authenticate the instrument.

Accepted Answer

A) True 
 B)False

Question 9

To certify a check, the bank must:

Accepted Answer

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

Question 10

An obligation to pay a negotiable instrument subject to conditions precedent is known as:

Accepted Answer

A)  secondary liability. 
B)  acceptance. 
C)  primary liability. 
D)  dishonor. 
A)  secondary liability. 
B)  acceptance. 
C)  primary liability. 
D)  dishonor.

Question 11

Elder, an authorized agent for Mullins, signs a negotiable instrument, "Mullins, principal, by Elder, agent." Mullins has primary liability and Elder has secondary liability on the instrument.

Accepted Answer

A) True 
 B)False

Question 12

An accommodation party will always be primarily liable on an instrument.

Accepted Answer

A) True 
 B)False

Question 13

An accommodation party's liability is determined by the capacity in which he signs.

Accepted Answer

A) True 
 B)False

Exam 26: Liability of Parties

Discuss the effect of an unauthorized signature on an instrument.

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.

Checks, when presented, are automatically certified.

Primary liability does not apply to issuers of cashier's checks.

Bob took a check written by Jack to Jack's bank to be certified.The bank stamped "Certified" on it and gave it back to Bob.What consequence?

Conversion of an instrument will occur if:

The signature of the maker of a note may be typewritten or signed by means of a signature stamp so long as it represents a present intention to authenticate the instrument.

To certify a check, the bank must:

An obligation to pay a negotiable instrument subject to conditions precedent is known as:

Elder, an authorized agent for Mullins, signs a negotiable instrument, "Mullins, principal, by Elder, agent." Mullins has primary liability and Elder has secondary liability on the instrument.

An accommodation party will always be primarily liable on an instrument.

An accommodation party's liability is determined by the capacity in which he signs.

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

Form and Content

Transfer and Holder in Due Course

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

Filters