Question 1

Which of the following can be exchanged for cash by merely having possession of the instrument?

Accepted Answer

A) a certificate of deposit 
B) an allonge 
C) an order instrument 
D) a bearer instrument 
A) a certificate of deposit 
B) an allonge 
C) an order instrument 
D) a bearer instrument D

Question 2

Unqualified indorsements are considered negotiable instruments.

Accepted Answer

A) True 
 B)False  True

Question 3

An indorsement that contains some sort of instruction from the indorser is known as a ________.

Accepted Answer

A) nonrestrictive indorsement 
B) restrictive indorsement 
C) qualified indorsement 
D) special indorsement 
A) nonrestrictive indorsement 
B) restrictive indorsement 
C) qualified indorsement 
D) special indorsement B

Question 4

An indorsee who accepts a defective instrument qualifies as a holder in due course.

Accepted Answer

A) True 
 B)False

Question 5

The transfer of rights under a nonnegotiable contract is known as an assignment.

Accepted Answer

A) True 
 B)False

Question 6

A(n)________ indorsement includes the notation "without recourse" or similar language that disclaims liability of the indorser.

Accepted Answer

A) qualified 
B) unqualified 
C) promissory 
D) competent 
A) qualified 
B) unqualified 
C) promissory 
D) competent

Question 7

A person who takes a negotiable instrument for value,in good faith,and without notice that it is defective or overdue is referred to as a(n)________.

Accepted Answer

A) holder 
B) holder in due course 
C) unqualified indorser 
D) assignee 
A) holder 
B) holder in due course 
C) unqualified indorser 
D) assignee

Question 8

Which of the following is true of an unqualified indorsement?

Accepted Answer

A) It does not limit or disclaim liability. 
B) It obligates the indorser to pay for the instrument. 
C) It guarantees payment of the instrument if the maker defaults. 
D) It protects subsequent indorsees from liability. 
A) It does not limit or disclaim liability. 
B) It obligates the indorser to pay for the instrument. 
C) It guarantees payment of the instrument if the maker defaults. 
D) It protects subsequent indorsees from liability.

Question 9

Where the name of the payee is misspelled,the indorsement becomes invalid.

Accepted Answer

A) True 
 B)False

Question 10

Lisa buys a used car from Kelly.She pays 10 percent of the cost down and signs a negotiable promissory note promising to pay Kelly the remainder of the purchase price,with interest,in 12 equal monthly installments.At the time of sale,Kelly lied about the mileage of the automobile.Later,Kelly negotiated the note to Frances,who has no notice of the lie.Frances,a holder in due course (HDC),negotiated the note to Zoe,who is not an HDC.Which of the following is Zoe in regards to the promissory note?

Accepted Answer

A) a holder in due course 
B) a holder 
C) an assignee 
D) an assignor 
A) a holder in due course 
B) a holder 
C) an assignee 
D) an assignor

Question 11

Explain,in as much detail as possible,how an indorsement is made.

Accepted Answer

An indorsement is the signature of a sig

Question 12

Nonrestrictive indorsements contain instructions from the indorser.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is a similarity between bearer paper and order paper?

Accepted Answer

A) both require a specific payee to be named 
B) both require indorsements to be considered negotiable 
C) both require delivery to be considered negotiable 
D) both can be claimed by whoever presents the instrument for payment 
A) both require a specific payee to be named 
B) both require indorsements to be considered negotiable 
C) both require delivery to be considered negotiable 
D) both can be claimed by whoever presents the instrument for payment

Question 14

A(n)________ is a signature and other directions written by or on behalf of the holder somewhere on an instrument.

Accepted Answer

A) recommendation 
B) assignment 
C) indorsement 
D) reference 
A) recommendation 
B) assignment 
C) indorsement 
D) reference

Question 15

Which of the following is true of a special indorsement?

Accepted Answer

A) It is only considered valid if it includes words of negotiation. 
B) It requires the signature of the indorser to be valid. 
C) It can be negotiated just on delivery. 
D) It is considered a bearer instrument. 
A) It is only considered valid if it includes words of negotiation. 
B) It requires the signature of the indorser to be valid. 
C) It can be negotiated just on delivery. 
D) It is considered a bearer instrument.

Question 16

Which of the following is true of an indorsement to multiple persons using the virgule?

Accepted Answer

A) it can only be indorsed further with the signature of the drawer 
B) neither person can individually negotiate the instrument 
C) either person can individually negotiate the instrument 
D) such an instrument cannot be subsequently negotiated 
A) it can only be indorsed further with the signature of the drawer 
B) neither person can individually negotiate the instrument 
C) either person can individually negotiate the instrument 
D) such an instrument cannot be subsequently negotiated

Question 17

Which of the following would be a legitimate method to convert an order paper to a bearer paper?

Accepted Answer

A) indorsement 
B) adding the term "pay to the order of" 
C) delivering the order paper 
D) specifying a payee 
A) indorsement 
B) adding the term "pay to the order of" 
C) delivering the order paper 
D) specifying a payee

Question 18

If an instrument is payable jointly using the word "and," both persons' indorsements are necessary to negotiate the instrument.

Accepted Answer

A) True 
 B)False

Question 19

Only a holder in due course can legally negotiate commercial paper.

Accepted Answer

A) True 
 B)False

Question 20

If a virgule is used,both parties are necessary to negotiate the instrument.

Accepted Answer

A) True 
 B)False

Exam 23: Holder in Due Course and Transferability

Which of the following can be exchanged for cash by merely having possession of the instrument?

Unqualified indorsements are considered negotiable instruments.

An indorsement that contains some sort of instruction from the indorser is known as a ________.

An indorsee who accepts a defective instrument qualifies as a holder in due course.

The transfer of rights under a nonnegotiable contract is known as an assignment.

A(n)________ indorsement includes the notation "without recourse" or similar language that disclaims liability of the indorser.

A person who takes a negotiable instrument for value,in good faith,and without notice that it is defective or overdue is referred to as a(n)________.

Which of the following is true of an unqualified indorsement?

Where the name of the payee is misspelled,the indorsement becomes invalid.

Explain,in as much detail as possible,how an indorsement is made.

Nonrestrictive indorsements contain instructions from the indorser.

Which of the following is a similarity between bearer paper and order paper?

A(n)________ is a signature and other directions written by or on behalf of the holder somewhere on an instrument.

Which of the following is true of a special indorsement?

Which of the following is true of an indorsement to multiple persons using the virgule?

Which of the following would be a legitimate method to convert an order paper to a bearer paper?

If an instrument is payable jointly using the word "and," both persons' indorsements are necessary to negotiate the instrument.

Only a holder in due course can legally negotiate commercial paper.

If a virgule is used,both parties are necessary to negotiate the instrument.

Legal Environment of Business and Online Commerce

Courts and Jurisdiction

Judicial, alternative, and Online Dispute Resolution

Constitutional Law for Business and E-Commerce

Intentional Torts and Negligence

Product and Strict Liability

Intellectual Property and Cyber Piracy

Criminal Law and Cyber Crime

Nature of Traditional and E-Contracts

Agreement

Consideration and Promissory Estoppel

Capacity and Legality

Genuineness of Assent and Undue Influence

Statute of Frauds and Equitable Exceptions

Third-Party Rights and Discharge

Remedies for Breach of Traditional and E-Contracts

Digital Law and E-Commerce

Formation of Sales and Lease Contracts

Title to Goods and Risk of Loss

Remedies for Breach of Sales and Lease Contracts

Warranties

Creation of Negotiable Instruments

Liability, defenses, and Discharge

Banking System and Electronic Financial Transactions

Credit, mortgages, and Debtors Rights

Secured Transactions

Bankruptcy and Reorganization

Agency Formation and Termination

Liability of Principals, agents, and Independent Contractors

Employment, worker Protection, and Immigration Law

Labor Law

Equal Opportunity in Employment

Small Business, entrepreneurship, and General Partnerships

Limited Partnerships and Special Partnerships

Corporate Formation and Financing

Corporate Governance and the Sarbanes-Oxley Act

Corporate Acquisitions and Multinational Corporations

Limited Liability Companies and Limited Liability Partnerships

Franchises and Special Forms of Businesses

Investor Protection, e-Securities, and Wall Street Reform

Ethics and Social Responsibility of Business

Administrative Law and Regulatory Agencies

Consumer Protection and Product Safety

Environmental Protection

Antitrust Law and Unfair Trade Practices

Personal Property, real Property, and Insurance

Real Property

Landlord-Tenant Law and Land Use Regulation

Insurance

Accountants Duties and Liability

Wills, trusts, and Estates

Family Law

International and World Trade Law

Filters