Exam 27: Online: Special Contracts: Negotiable Instruments

Shauna drew a cheque on her account at the Bank of Whitehorse.That cheque passed through several people before Kyle acquired possession of it.Because Shauna's account was overdrawn, the Bank of Whitehorse dishonoured the cheque when Kyle presented it for payment.Kyle realizes that there is no point in suing Shauna because she simply does not have any money.Is there anyone else to whom Kyle can look for payment? Do you require any additional information in order to fully answer this question?

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Question 1

Correct Answer:

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Kyle probably cannot successfully sue the Bank of Whitehorse.Although he has rights against Shauna, as the drawer of the cheque, he does not seem to have any rights against the bank, as the drawee of the cheque.(Kyle does not have privity to the contract that was created between Shauna and the bank when she opened her account.) The situation would be different, however, if the cheque was certified.Certification is "something equivalent to money." As a result of certifying the cheque, the Bank of Whitehorse would have created a legal right that the holder of the cheque could use to demand payment.In that situation, Kyle could successfully sue the bank for the money.

The facts indicate that the cheque passed through several other people before Kyle acquired it.Kyle may be able to successfully sue those people.His ability to do so would depend upon whether or not any of those people endorsed the cheque.(They probably would not have done so if the cheque was in bearer form at all times.) As a general rule, an endorser is liable to pay the amount of a dishonoured cheque.There are, however, exceptions to that rule.Some types of endorsement (eg an identifying endorsement) may not create liability.Furthermore, Kyle probably would be entitled to sue the endorsers only if he provided them with timely notice of dishonour.

Raj owed $5000 to Monica.In payment of that debt, he gave her a cheque for that amount that was drawn on his account at the Bank of Regina.In fact, his account only held $3000 worth of credits.Which of the following statements is TRUE?

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Question 2

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Patrick bought a widget from Ishani.The purchase price was $25 000.He paid by giving her a cheque for that amount that was drawn on his account at the Bank of Fundy.The cheque was made payable to Ishani.By coincidence, Ishani owes $25 000 to XYZ Inc.Which of the following statements is TRUE?

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Question 3

Correct Answer:

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A share certificate may be a type of negotiable instrument.

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Question 4

Scott bought a widget from Gowhara.The price was $10 000.He paid with a cheque that he had drawn on his account at the Bank of Kamloops.Scott had the cheque certified before he gave it to Gowhara.In fact, Scott's account balance was only $8000.When he discovered that fact, he went to the bank and gave instructions to have the cheque countermanded but the bank refused that request.Which of the following statements is TRUE?

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Question 5

Stefan gave a cheque for $500 to his daughter, Monique, as a birthday present.Because Monique did not give any consideration in exchange for her birthday present, Stefan's bank is not permitted to honour the cheque.

(True/False)

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Question 6

Bamidele drafted a negotiable instrument and delivered it to Beta Inc in payment of a debt.That instrument contains an acceleration clause.This means that

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Question 7

A document may be a negotiable instrument even if it does not satisfy the requirements of the Bills of Exchange Act.

(True/False)

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Question 8

Ranjit currently has possession of a cheque that was created by Maura.Although Maura created that cheque on January 1, the instrument is dated June 1.The cheque originally was payable to Nora.The cheque now bears endorsements by Nora and Shelley.Maura, Nora, Shelley, and Ranjit are the only parties that have dealt with the cheque.Which of the following statements is TRUE?

(Multiple Choice)

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Question 9

Identify two types of endorsements that may be used by a person who is not the holder of a negotiable instrument.Provide an example of each.

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Question 10

Wendell bought a widget from Sharon and used a cheque to pay the purchase price of $10 000.Wendell made the cheque payable to Sharon personally.That cheque was drawn on Wendell's account at the Bank of Gander.A thief stole the cheque from Sharon, forged her general endorsement, and sold the cheque to Oren.Oren then endorsed the cheque and negotiated it to Abby.Which of the following statements is TRUE?

(Multiple Choice)

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Question 11

Hakim drafted a negotiable instrument and delivered it to Omega Ltd in payment of a debt.Before Omega actually received a monetary benefit, the instrument was formally accepted by another party.The instrument may be

(Multiple Choice)

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Question 12

Jordan bought a widget from Sara.He paid the purchase price of $25 000 by giving her a cheque drawn upon his account at the Bank of Saskatoon.The facts involve three contracts.Identify those contracts and briefly explain the rights that each involves.

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Question 13

Martina bought a necklace from Roland.The price of the necklace was $10 000.Martina promised Roland that she would pay that amount to him.As part of the same transaction, she also gave him a cheque for that amount.Roland later bought a painting from Astral Gallery Inc.The price of the painting was $10 000.Which of the following statements is TRUE?

(Multiple Choice)

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Question 14

Which of the following statements is TRUE with respect to bills of exchange?

(Multiple Choice)

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Question 15

Which of the following are most likely to be classified as types of negotiable instrument?

(Multiple Choice)

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Question 16

Which of the following defences may be used against a holder of a bill of exchange?

(Multiple Choice)

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Question 17

Which of the following statements is TRUE with respect to notice of dishonour?

(Multiple Choice)

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Question 18

Which of the following concepts is not expressly addressed by the Bills of Exchange Act?

(Multiple Choice)

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Question 19

On 12 January 2016 Rajiv wrote a cheque to Brett.That cheque was dated for 28 January 2016.Although Rajiv had plenty of funds in his account when he wrote the cheque, he spent virtually every cent he had during a ridiculous gambling spree in the summer of 2016.Brett, who was unaware of that fact, finally presented the cheque to the bank for payment on 29 November 2016.Given the state of Rajiv's account, however, the bank refused to honour the cheque.At that point, Rajiv's cheque can be characterized as being

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Question 20

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Exam 27: Online: Special Contracts: Negotiable Instruments

Raj owed $5000 to Monica.In payment of that debt, he gave her a cheque for that amount that was drawn on his account at the Bank of Regina.In fact, his account only held $3000 worth of credits.Which of the following statements is TRUE?

Patrick bought a widget from Ishani.The purchase price was $25 000.He paid by giving her a cheque for that amount that was drawn on his account at the Bank of Fundy.The cheque was made payable to Ishani.By coincidence, Ishani owes $25 000 to XYZ Inc.Which of the following statements is TRUE?

A share certificate may be a type of negotiable instrument.

Stefan gave a cheque for $500 to his daughter, Monique, as a birthday present.Because Monique did not give any consideration in exchange for her birthday present, Stefan's bank is not permitted to honour the cheque.

Bamidele drafted a negotiable instrument and delivered it to Beta Inc in payment of a debt.That instrument contains an acceleration clause.This means that

A document may be a negotiable instrument even if it does not satisfy the requirements of the Bills of Exchange Act.

Identify two types of endorsements that may be used by a person who is not the holder of a negotiable instrument.Provide an example of each.

Hakim drafted a negotiable instrument and delivered it to Omega Ltd in payment of a debt.Before Omega actually received a monetary benefit, the instrument was formally accepted by another party.The instrument may be

Jordan bought a widget from Sara.He paid the purchase price of $25 000 by giving her a cheque drawn upon his account at the Bank of Saskatoon.The facts involve three contracts.Identify those contracts and briefly explain the rights that each involves.

Which of the following statements is TRUE with respect to bills of exchange?

Which of the following are most likely to be classified as types of negotiable instrument?

Which of the following defences may be used against a holder of a bill of exchange?

Which of the following statements is TRUE with respect to notice of dishonour?

Which of the following concepts is not expressly addressed by the Bills of Exchange Act?

Risk Management and Sources of Law

Litigation and Alternative Dispute Resolution

Introduction to Torts

Intentional Torts

Miscellaneous Torts Affecting Business

Negligence

The Nature and Creation of Contracts

Consideration and Privity

Representations and Terms

Contractual Defects

Discharge and Breach

Contractual Remedies

Special Contracts: Sale of Goods

Real Property: Interests and Leases

Real Property: Sales and Mortgages

Personal Property: Bailment and Insurance

Intellectual Property

Electronic Commerce

Agency and Other Methods of Carrying on Business

Basic Forms of Business Organizations

Legal Rules for Corporate Governance

Secured Transactions

Dealing With Bankruptcy and Insolvency

Government Regulation of Business

Individual Employment

Organized Labour

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