Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Discuss the effect of an unauthorized signature on an instrument.

Accepted Answer

Unauthorized signatures include both for

Question 3

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 4

Thomas is the treasurer of Oklaw, Inc. He has authority to sign on behalf of the company. One day, he signs a note as follows: "Thomas Maurtin, as treasurer." The company's name does not appear on the note. Is the company liable on the note? Is Thomas liable on the note? Explain.

Accepted Answer

When an authorized agent indicates that

Question 5

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 6

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)  All of these. 
E)  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)  All of these. 
E)  Both transfer an instrument  and obtain payment or acceptance of an instrument  are correct.

Question 7

Presentment is a demand made by or on behalf of a person entitled to enforce the instrument for:

Accepted Answer

A)  payment by the drawee or other party obligated to pay the instrument. 
B)  acceptance by the drawee of a draft. 
C)  Both are correct. 
D)  None of these are correct. 
A)  payment by the drawee or other party obligated to pay the instrument. 
B)  acceptance by the drawee of a draft. 
C)  Both are correct. 
D)  None of these are correct.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

Transferor's warranties and presenter's warranties are implied warranties imposed only on those who sign an instrument.

Accepted Answer

A) True 
 B)False

Question 10

Zelda signs a promissory note for $2,500 to First Bank. At the request of both Zelda and the bank, Ann also signs the note as an accommodation maker. In this situation:

Accepted Answer

A)  Zelda is primarily liable on the note. 
B)  Ann is primarily liable on the note. 
C)  Ann has secondary liability on the note 
D)  Zelda and Ann are both primarily liable on the note. 
E)  Zelda is primarily liable and  Ann has secondary liability on the note 
A)  Zelda is primarily liable on the note. 
B)  Ann is primarily liable on the note. 
C)  Ann has secondary liability on the note 
D)  Zelda and Ann are both primarily liable on the note. 
E)  Zelda is primarily liable and  Ann has secondary liability on the note

Question 11

Notice of dishonor of an instrument must be given:

Accepted Answer

A)  by a bank before midnight of the third banking day following the banking day on which it receives notice of dishonor. 
B)  by a bank before midnight on the next banking day following the banking day on which it receives notice of dishonor. 
C)  by a nonbank, with respect to an instrument taken for collection, within three business days following the day on which it received notice. 
D)  in all situations within seven calendar days following the day on which dishonor occurred. 
A)  by a bank before midnight of the third banking day following the banking day on which it receives notice of dishonor. 
B)  by a bank before midnight on the next banking day following the banking day on which it receives notice of dishonor. 
C)  by a nonbank, with respect to an instrument taken for collection, within three business days following the day on which it received notice. 
D)  in all situations within seven calendar days following the day on which dishonor occurred.

Question 12

Jan Arthur writes a $200 check to Bruce Nole who indorses it "Bruce Nole." Bruce gives the check to Anne Tate who indorses it "Without Recourse. Anne Tate." Anne sends the check to Joe Black, MD to pay her medical bill. If the bank refuses to honor the check, Black:

Accepted Answer

A)  can collect only from Jan Arthur. 
B)  can collect only from Jan Arthur or Bruce Nole. 
C)  can collect from the drawer or any indorser whose name appears on the check. 
D)  has no other recourse. 
A)  can collect only from Jan Arthur. 
B)  can collect only from Jan Arthur or Bruce Nole. 
C)  can collect from the drawer or any indorser whose name appears on the check. 
D)  has no other recourse.

Question 13

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 14

Warranties of a person obtaining payment or acceptance of an unaccepted draft include:

Accepted Answer

A)  the warrantor is a person entitled to enforce the draft. 
B)  the warrantor has no knowledge that the drawer's signature is unauthorized. 
C)  the draft has not been altered. 
D)  All of these are correct. 
A)  the warrantor is a person entitled to enforce the draft. 
B)  the warrantor has no knowledge that the drawer's signature is unauthorized. 
C)  the draft has not been altered. 
D)  All of these are correct.

Question 15

Which of the following is a warranty of the transferor?

Accepted Answer

A)  Transferor has no knowledge of any insolvency proceedings with respect to the maker, acceptor, or drawer of an unaccepted instrument. 
B)  Transferor warrants that all signatures are authentic and authorized. 
C)  Transferor warrants that he is entitled to enforce the instrument. 
D)  All of these are warranties of the transferor. 
A)  Transferor has no knowledge of any insolvency proceedings with respect to the maker, acceptor, or drawer of an unaccepted instrument. 
B)  Transferor warrants that all signatures are authentic and authorized. 
C)  Transferor warrants that he is entitled to enforce the instrument. 
D)  All of these are warranties of the transferor.

Question 16

List and generally explain the warranties on presentment.

Accepted Answer

The warranties on presentment depend on

Question 17

a. What warranties are given by an indorser? 
b. What warranties are given by a transferor by delivery without indorsement? 
c. If a person has no contractual liability on the instrument, does that mean he has no liability as a result of the transaction involved? Explain.

Accepted Answer

a. 
(1) The transferor is entitled to en

Question 18

A(n) ___________ signs an instrument to lend his credit to an instrument, and his liability is determined by the capacity in which he signs.

Accepted Answer

A)  indorser 
B)  accommodation party 
C)  authorized agent 
D)  maker 
A)  indorser 
B)  accommodation party 
C)  authorized agent 
D)  maker

Question 19

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

Question 20

Kelly wrote a check to Trish, which Trish immediately changed from $20 to $120. She negotiated the check to Carl for value, who in turn took it to Kelly's bank for certification. Kelly's bank checked his account and certified the check since there were sufficient funds to cover the check. Thereafter, Carl gave the check to General Motors as part of the down payment for his car. G.M. presents the check to Kelly's bank for payment and they discover the alteration. The bank:

Accepted Answer

A)  can sue G.M. for breach of presentment warranty of no alteration. 
B)  can charge Carl's account for $120. 
C)  can refuse to pay G.M. more than $20. 
D)  must pay G.M. $120 and cannot sue them for breach of warranty. 
A)  can sue G.M. for breach of presentment warranty of no alteration. 
B)  can charge Carl's account for $120. 
C)  can refuse to pay G.M. more than $20. 
D)  must pay G.M. $120 and cannot sue them for breach of warranty.

Exam 26: Liability of Parties

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

Discuss the effect of an unauthorized signature on an instrument.

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

Thomas is the treasurer of Oklaw, Inc. He has authority to sign on behalf of the company. One day, he signs a note as follows: "Thomas Maurtin, as treasurer." The company's name does not appear on the note. Is the company liable on the note? Is Thomas liable on the note? Explain.

To certify a check, the bank must:

Warranty liability applies to persons who:

Presentment is a demand made by or on behalf of a person entitled to enforce the instrument for:

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

Transferor's warranties and presenter's warranties are implied warranties imposed only on those who sign an instrument.

Zelda signs a promissory note for $2,500 to First Bank. At the request of both Zelda and the bank, Ann also signs the note as an accommodation maker. In this situation:

Notice of dishonor of an instrument must be given:

Jan Arthur writes a $200 check to Bruce Nole who indorses it "Bruce Nole." Bruce gives the check to Anne Tate who indorses it "Without Recourse. Anne Tate." Anne sends the check to Joe Black, MD to pay her medical bill. If the bank refuses to honor the check, Black:

In which of the following situations has conversion NOT occurred?

Warranties of a person obtaining payment or acceptance of an unaccepted draft include:

Which of the following is a warranty of the transferor?

List and generally explain the warranties on presentment.

a. What warranties are given by an indorser? b. What warranties are given by a transferor by delivery without indorsement? c. If a person has no contractual liability on the instrument, does that mean he has no liability as a result of the transaction involved? Explain.

A(n) ___________ signs an instrument to lend his credit to an instrument, and his liability is determined by the capacity in which he signs.

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?

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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