Question 1

To be negotiable, an instrument must include all of the following, except:

Accepted Answer

A)  a writing. 
B)  signature of the maker or drawer. 
C)  unconditional promise or order to pay. 
D)  holder in due course. 
A)  a writing. 
B)  signature of the maker or drawer. 
C)  unconditional promise or order to pay. 
D)  holder in due course. D

Question 2

If an order or promise is not for money, the instrument is not negotiable.

Accepted Answer

A) True 
 B)False  True

Question 3

A negotiable instrument may be partly printed and partly typewritten.

Accepted Answer

A) True 
 B)False  True

Question 4

Negotiability is the characteristic that distinguishes commercial paper and instruments from ordinary contracts.

Accepted Answer

A) True 
 B)False

Question 5

An authorized agent signing an instrument will not be liable on the instrument if the agent discloses on the paper either the identity of the principal or the fact that the agent has signed in a representative capacity.

Accepted Answer

A) True 
 B)False

Question 6

If instrument is negotiable, it can be:

Accepted Answer

A)  paid on demand. 
B)  cancelled by the maker. 
C)  assigned by contract. 
D)  transferred by negotiation. 
A)  paid on demand. 
B)  cancelled by the maker. 
C)  assigned by contract. 
D)  transferred by negotiation.

Question 7

An instrument is order paper when by its terms it is payable to the order of any person described in it, or to a person or order.

Accepted Answer

A) True 
 B)False

Question 8

Article 3 of the UCC establishes a four year statute of limitations for most actions involving negotiable instruments.

Accepted Answer

A) True 
 B)False

Question 9

The party who writes or creates a promissory note is called the:

Accepted Answer

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

Question 10

A payee has no rights in an instrument until:

Accepted Answer

A)  the drawer or the maker has delivered the instrument to the payee. 
B)  an acceptor has been established. 
C)  an accommodation party has signed the instrument. 
D)  a guarantor has signed the instrument. 
A)  the drawer or the maker has delivered the instrument to the payee. 
B)  an acceptor has been established. 
C)  an accommodation party has signed the instrument. 
D)  a guarantor has signed the instrument.

Question 11

Commercial paper are transferable, written, signed promises to pay a specified sum of money.

Accepted Answer

A) True 
 B)False

Question 12

JeanClaude creates and signs a promissory note. He promises to pay Suzy $1,000 worth of French francs plus $500 worth of custom-made shirts on October 15, in exchange for Suzy's help in renovating his kitchen. The note is :

Accepted Answer

A)  nonnegotiable, because of JeanClaude's signature. 
B)  negotiable, because all the elements of the note are valid. 
C)  nonnegotiable, because it calls for payment in French francs. 
D)  nonnegotiable, because it calls for payment in shirts. 
A)  nonnegotiable, because of JeanClaude's signature. 
B)  negotiable, because all the elements of the note are valid. 
C)  nonnegotiable, because it calls for payment in French francs. 
D)  nonnegotiable, because it calls for payment in shirts.

Question 13

An unconditional written promise made by one person to another, signed by the maker, that promises to pay on demand a specific sum of money to the bearer is a:

Accepted Answer

A)  nonnegotiable draft. 
B)  bill of exchange. 
C)  promissory note. 
D)  certificate of deposit. 
A)  nonnegotiable draft. 
B)  bill of exchange. 
C)  promissory note. 
D)  certificate of deposit.

Question 14

An accommodation party is a third person who signs an instrument to lend credit to another party to the paper.

Accepted Answer

A) True 
 B)False

Question 15

If an instrument is nonnegotiable, the rights of the parties are governed by the general principles of contract law.

Accepted Answer

A) True 
 B)False

Question 16

Revised UCC Article 3 refers to all of the following as secondary obligors, except:

Accepted Answer

A)  drawers 
B)  indorsers 
C)  accommodation parties 
D)  acceptors 
A)  drawers 
B)  indorsers 
C)  accommodation parties 
D)  acceptors

Question 17

A check that is postdated ceases to be order paper.

Accepted Answer

A) True 
 B)False

Question 18

In a negotiable instrument, the promise or order to pay must be unconditional.

Accepted Answer

A) True 
 B)False

Question 19

Antedating an instrument affects an instrument's negotiability.

Accepted Answer

A) True 
 B)False

Question 20

If an instrument is negotiable, it is governed by Article 4 of the UCC.

Accepted Answer

A) True 
 B)False

Exam 27: Kinds of Negotiable Instruments and Negotiability

To be negotiable, an instrument must include all of the following, except:

If an order or promise is not for money, the instrument is not negotiable.

A negotiable instrument may be partly printed and partly typewritten.

Negotiability is the characteristic that distinguishes commercial paper and instruments from ordinary contracts.

An authorized agent signing an instrument will not be liable on the instrument if the agent discloses on the paper either the identity of the principal or the fact that the agent has signed in a representative capacity.

If instrument is negotiable, it can be:

An instrument is order paper when by its terms it is payable to the order of any person described in it, or to a person or order.

Article 3 of the UCC establishes a four year statute of limitations for most actions involving negotiable instruments.

The party who writes or creates a promissory note is called the:

A payee has no rights in an instrument until:

Commercial paper are transferable, written, signed promises to pay a specified sum of money.

JeanClaude creates and signs a promissory note. He promises to pay Suzy $1,000 worth of French francs plus $500 worth of custom-made shirts on October 15, in exchange for Suzy's help in renovating his kitchen. The note is :

An unconditional written promise made by one person to another, signed by the maker, that promises to pay on demand a specific sum of money to the bearer is a:

An accommodation party is a third person who signs an instrument to lend credit to another party to the paper.

If an instrument is nonnegotiable, the rights of the parties are governed by the general principles of contract law.

Revised UCC Article 3 refers to all of the following as secondary obligors, except:

A check that is postdated ceases to be order paper.

In a negotiable instrument, the promise or order to pay must be unconditional.

Antedating an instrument affects an instrument's negotiability.

If an instrument is negotiable, it is governed by Article 4 of the UCC.

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Transfers of Negotiable Instruments and Warranties of Parties

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Types of Business Organizations

Partnerships

LPs, LLCs, and LLPs

Corporate Formation

Shareholder Rights in Corporations

Securities Regulation

Accountants Liability and Malpractice

Management of Corporations

Real Property

Environmental Law and Land Use Controls

Leases

Decedents Estates and Trusts

Filters