Exam 24: Form and Content

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Explain the effect that a reference to other agreements has on negotiable instruments and the difference between a mere reference and a negotiable instrument's being subject to the terms of another agreement.

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Question 1

Correct Answer:

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A reference to the mere existence of another agreement does not affect negotiability because it merely describes the consideration and transaction giving rise to the instrument. However, if a right to payment is made "subject to" the terms of another agreement, the instrument is not negotiable. This restriction against making an instrument subject to another agreement is to enable any person to determine the right to payment provided by the instrument without having to look beyond its four corners.

Handwritten words supersede typewritten words contained in negotiable instruments.

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(True/False)

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Question 2

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True

An instrument is payable to order if it is payable:

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(Multiple Choice)

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Question 3

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A definite time required for negotiability would NOT be satisfied in which instance?

(Multiple Choice)

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Question 4

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."

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Question 5

A maker must sign in the lower right-hand corner of the instrument.

(True/False)

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Question 6

An "I.O.U." is a negotiable instrument.

(True/False)

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Question 7

Which of the following would be a bearer instrument?

(Multiple Choice)

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Question 8

A certificate of deposit differs from a promissory note in that:

(Multiple Choice)

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Question 9

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

(True/False)

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Question 10

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

(Multiple Choice)

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Question 11

Revised Article 1 of the UCC states that the "money" requirement for a negotiable instrument means the current official currency of the government, not just a medium of exchange authorized or adopted by a sovereign government as part of its currency.

(True/False)

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Question 12

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

(True/False)

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Question 13

Under the Check 21 Act:

(Multiple Choice)

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Question 14

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

(True/False)

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Question 15

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

(Multiple Choice)

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Question 16

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?

(Multiple Choice)

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Question 17

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

(Multiple Choice)

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Question 18

The UCC states that an instrument fulfills the requirements of being payable to bearer if it:

(Multiple Choice)

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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.

(True/False)

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Question 20

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Exam 24: Form and Content

Explain the effect that a reference to other agreements has on negotiable instruments and the difference between a mere reference and a negotiable instrument's being subject to the terms of another agreement.

Handwritten words supersede typewritten words contained in negotiable instruments.

An instrument is payable to order if it is payable:

A definite time required for negotiability would NOT be satisfied in which instance?

A maker must sign in the lower right-hand corner of the instrument.

An "I.O.U." is a negotiable instrument.

Which of the following would be a bearer instrument?

A certificate of deposit differs from a promissory note in that:

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

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

Revised Article 1 of the UCC states that the "money" requirement for a negotiable instrument means the current official currency of the government, not just a medium of exchange authorized or adopted by a sovereign government as part of its currency.

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

Under the Check 21 Act:

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

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

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?

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

The UCC states that an instrument fulfills the requirements of being payable to bearer if it:

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

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