Question 1

What is an "acceleration clause"? When and why is such a clause inserted into a negotiable instrument?

Accepted Answer

An acceleration clause is often inserted

Question 2

Stephania drafted a cheque that named Wilbur as the payee and the Bank of Alberta as the drawee.The cheque was certified.This must mean that

Accepted Answer

A) certification was provided in response to Stephania's request. 
B) certification was provided in response to Wilbur's request. 
C) the cheque has already been dishonoured. 
D) the cheque has been endorsed by at least one person. 
E) the drawee believes that the drawer's account contains sufficient funds. 
A) certification was provided in response to Stephania's request. 
B) certification was provided in response to Wilbur's request. 
C) the cheque has already been dishonoured. 
D) the cheque has been endorsed by at least one person. 
E) the drawee believes that the drawer's account contains sufficient funds.

Question 3

Beryl opened a chequing account at the Bank of Banff.As part of that transaction, she deposited ten $100 bills into her new chequing account.Technically speaking, she continues to own those bills until she writes a cheque on her account.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following represent types of endorsement that may be used in connection with negotiable instruments under the Bills of Exchange Act?

Accepted Answer

A) special and confirming 
B) qualified and promissory 
C) identifying and restrictive 
D) general and relative 
E) conditional and wanton 
A) special and confirming 
B) qualified and promissory 
C) identifying and restrictive 
D) general and relative 
E) conditional and wanton

Question 5

Milosz is the holder in due course of a cheque that has been negotiated several times.Identify a situation in which he may be subject to the equities if he seeks to enforce the instrument against the drawer.

Accepted Answer

A holder in due course normally can be d

Question 6

Miguel opened a chequing account at the Bank of Guelph.As part of that transaction, Miguel authorized the bank to credit his account every time that he wrote a cheque on it.

Accepted Answer

A) True 
 B)False

Question 7

The Bills of Exchange Act and the Sale of Goods Act both arose as codifications of judge-made rules.Furthermore, the original legislation in each case was intended to increase certainty and efficiency in the commercial world.There is, however, a major difference between the two statutes.One generally provides default rules that the parties are free to accept or reject.The other does not allow the parties to freely opt in and out of its sections.Which of the two statutes is less flexible and why?

Accepted Answer

The Bills of Exchange Act is far less fl

Question 8

You and I have entered into a contract for the sale of a boat.We have agreed that I will deliver possession of the vessel to you at the same time that you pay the purchase price of $10 000.You have the option of paying with either cash or a certified cheque.Which of the following statements is TRUE?

Accepted Answer

A) You would prefer to pay with a cheque because $10 000 in cash does not easily fit into your pocket. 
B) You would prefer to pay with cash because cash is less risky than a cheque if a theft occurs. 
C) I would prefer to receive a cheque because it is more difficult for me to transfer cash to a stranger. 
D) I would prefer to receive cash because a certified cheque would not give me any rights against the drawee bank. 
E) Certification of a cheque would be relevant only if I intended to negotiate the cheque to someone other than a bank. 
A) You would prefer to pay with a cheque because $10 000 in cash does not easily fit into your pocket. 
B) You would prefer to pay with cash because cash is less risky than a cheque if a theft occurs. 
C) I would prefer to receive a cheque because it is more difficult for me to transfer cash to a stranger. 
D) I would prefer to receive cash because a certified cheque would not give me any rights against the drawee bank. 
E) Certification of a cheque would be relevant only if I intended to negotiate the cheque to someone other than a bank.

Question 9

Although you agreed to sell a widget to me, you are concerned about actually receiving payment.Discuss the main advantages and disadvantages of receiving payment from me in the form of cash or a simple cheque.

Accepted Answer

In many respects, cash is more desirable

Question 10

On January 1, Jasmine bought a speedboat from Malcolm.The purchase price was $100 000.Jasmine gave Malcolm a promissory note for $100 000.The note was payable in five monthly instalments beginning on March 1.Which of the following statements is TRUE?

Accepted Answer

A) Because a promissory note must be for a "sum certain," the note that Jasmine created could not require her to pay interest on the purchase price of $100 000. 
B) If Malcolm is unable to recover any money under the promissory note, he must sue Jasmine on the basis of their sales contract, rather than on the basis of the promissory note itself. 
C) Jasmine's promissory note cannot contain an acceleration clause because it is payable in instalments. 
D) A promissory note, like a bill of exchange, must have a drawee. 
E) After each installment payment, Jasmine should make sure that Malcolm writes a receipt onto the promissory note itself. 
A) Because a promissory note must be for a "sum certain," the note that Jasmine created could not require her to pay interest on the purchase price of $100 000. 
B) If Malcolm is unable to recover any money under the promissory note, he must sue Jasmine on the basis of their sales contract, rather than on the basis of the promissory note itself. 
C) Jasmine's promissory note cannot contain an acceleration clause because it is payable in instalments. 
D) A promissory note, like a bill of exchange, must have a drawee. 
E) After each installment payment, Jasmine should make sure that Malcolm writes a receipt onto the promissory note itself.

Question 11

Claire gave a cheque for $5000 to Antonio.Which of the following statements is TRUE?

Accepted Answer

A) Claire has created a special type of promissory note that is drawn upon a bank. 
B) Claire has created a special type of bill of exchange that is drawn upon a bank. 
C) Antonio is entitled to receive $5000 from Claire even if he did not provide any consideration in exchange for her cheque. 
D) Antonio will acquire rights against Claire only if her cheque is accepted by the drawee. 
E) Antonio has acquired rights that can be enforced directly against the drawee. 
A) Claire has created a special type of promissory note that is drawn upon a bank. 
B) Claire has created a special type of bill of exchange that is drawn upon a bank. 
C) Antonio is entitled to receive $5000 from Claire even if he did not provide any consideration in exchange for her cheque. 
D) Antonio will acquire rights against Claire only if her cheque is accepted by the drawee. 
E) Antonio has acquired rights that can be enforced directly against the drawee.

Question 12

Last October, Johnny Evers sold a gross of baseballs to Joe Tinker for $750.(Small items are often sold in a "gross." A "gross" is a dozen dozens, which is 144.) In payment for the baseballs, Tinker drew a negotiable instrument on his account at Wrigley's Bank and named Evers as the payee.On the same day that he sold the baseballs to Tinker, Evers purchased a ticket to a World Series game from Frank Chance for $750.In order to pay for that ticket, Evers turned over the negotiable instrument that he had received from Tinker, wrote the words "Pay to Frank Chance," and signed his name.At that point, the negotiable instrument most likely consisted of

Accepted Answer

A) a promissory note with a transferring endorsement. 
B) a bill of exchange with a second-party endorsement. 
C) a cheque with a special endorsement. 
D) a cheque with a closed endorsement. 
E) an invalid cheque. 
A) a promissory note with a transferring endorsement. 
B) a bill of exchange with a second-party endorsement. 
C) a cheque with a special endorsement. 
D) a cheque with a closed endorsement. 
E) an invalid cheque.

Question 13

Jacob bought a widget from Erin for $15 000.In payment, he gave her a cheque that was payable to her.The cheque was drawn on his account at the Bank of Kitchener.Erin signed her name on the back of the cheque and delivered it to Arthur in order to discharge a debt that she owed to him.Arthur presented the instrument to the Bank of Kitchener for payment, but was refused payment because the balance for Jacob's account was only $8000.Which of the following statements is TRUE?

Accepted Answer

A) Arthur may be able to sue Jacob and Erin. 
B) Arthur has a right to collect $8000 from the bank. 
C) If the widget that Jacob bought from Erin is defective, Arthur cannot acquire any rights against the drawer of the cheque. 
D) Notice of dishonour will be effective only if it is made in writing. 
E) Arthur should provide notice of dishonour to the bank's manager as soon as possible. 
A) Arthur may be able to sue Jacob and Erin. 
B) Arthur has a right to collect $8000 from the bank. 
C) If the widget that Jacob bought from Erin is defective, Arthur cannot acquire any rights against the drawer of the cheque. 
D) Notice of dishonour will be effective only if it is made in writing. 
E) Arthur should provide notice of dishonour to the bank's manager as soon as possible.

Question 14

You are the manager of the York Trust Company.Nadia, one of the company's customers, has drawn a bill of exchange upon her account with the company.That bill is for $50 000 and it names Seth as the payee.The bill is due on August 31.On June 1, Seth appears at your office seeking acceptance of the bill.Describe the process and effect of acceptance.As a matter of risk management, what special precaution should you exercise if you decide to accept the bill on behalf of the trust company?

Accepted Answer

The process of acceptance of a bill is s

Question 15

Elliot bought a widget from Margaret.He paid the purchase price of $5000 by giving her a cheque that he had drawn on his account at the Bank of Yorkton.Before Margaret had an opportunity to present the cheque for payment, Elliot died.The cheque therefore is automatically considered to be certified.

Accepted Answer

A) True 
 B)False

What is an "acceleration clause"? When and why is such a clause inserted into a negotiable instrument?

Stephania drafted a cheque that named Wilbur as the payee and the Bank of Alberta as the drawee.The cheque was certified.This must mean that

Beryl opened a chequing account at the Bank of Banff.As part of that transaction, she deposited ten $100 bills into her new chequing account.Technically speaking, she continues to own those bills until she writes a cheque on her account.

Which of the following represent types of endorsement that may be used in connection with negotiable instruments under the Bills of Exchange Act?

Milosz is the holder in due course of a cheque that has been negotiated several times.Identify a situation in which he may be subject to the equities if he seeks to enforce the instrument against the drawer.

Miguel opened a chequing account at the Bank of Guelph.As part of that transaction, Miguel authorized the bank to credit his account every time that he wrote a cheque on it.

You and I have entered into a contract for the sale of a boat.We have agreed that I will deliver possession of the vessel to you at the same time that you pay the purchase price of $10 000.You have the option of paying with either cash or a certified cheque.Which of the following statements is TRUE?

Although you agreed to sell a widget to me, you are concerned about actually receiving payment.Discuss the main advantages and disadvantages of receiving payment from me in the form of cash or a simple cheque.

On January 1, Jasmine bought a speedboat from Malcolm.The purchase price was $100 000.Jasmine gave Malcolm a promissory note for $100 000.The note was payable in five monthly instalments beginning on March 1.Which of the following statements is TRUE?

Claire gave a cheque for $5000 to Antonio.Which of the following statements is TRUE?

Elliot bought a widget from Margaret.He paid the purchase price of $5000 by giving her a cheque that he had drawn on his account at the Bank of Yorkton.Before Margaret had an opportunity to present the cheque for payment, Elliot died.The cheque therefore is automatically considered to be certified.

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

Filters

Exam 27: Online: Special Contracts: Negotiable Instruments

What is an "acceleration clause"? When and why is such a clause inserted into a negotiable instrument?

Stephania drafted a cheque that named Wilbur as the payee and the Bank of Alberta as the drawee.The cheque was certified.This must mean that

Beryl opened a chequing account at the Bank of Banff.As part of that transaction, she deposited ten $100 bills into her new chequing account.Technically speaking, she continues to own those bills until she writes a cheque on her account.

Which of the following represent types of endorsement that may be used in connection with negotiable instruments under the Bills of Exchange Act?

Milosz is the holder in due course of a cheque that has been negotiated several times.Identify a situation in which he may be subject to the equities if he seeks to enforce the instrument against the drawer.

Miguel opened a chequing account at the Bank of Guelph.As part of that transaction, Miguel authorized the bank to credit his account every time that he wrote a cheque on it.

Although you agreed to sell a widget to me, you are concerned about actually receiving payment.Discuss the main advantages and disadvantages of receiving payment from me in the form of cash or a simple cheque.

On January 1, Jasmine bought a speedboat from Malcolm.The purchase price was $100 000.Jasmine gave Malcolm a promissory note for $100 000.The note was payable in five monthly instalments beginning on March 1.Which of the following statements is TRUE?

Claire gave a cheque for $5000 to Antonio.Which of the following statements is TRUE?

Elliot bought a widget from Margaret.He paid the purchase price of $5000 by giving her a cheque that he had drawn on his account at the Bank of Yorkton.Before Margaret had an opportunity to present the cheque for payment, Elliot died.The cheque therefore is automatically considered to be certified.

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

Filters