Exam 14: Special Contracts: Negotiable Instruments

Bob signs his name on the back of a cheque he is receiving,indicating a special endorsement to Charles.However,assuming Charles and Bob have never met and do not know one another,Charles is reluctant to purchase that cheque from Bob.If a third party became involved to help bring assurance to the transaction,which of the following statements would most likely be written by the third party?

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 statements is TRUE with respect to notice of dishonour?

Analee bought a widget from Nathan.On March 1,she paid the purchase price by giving him a promissory note for $100 000.The entire payment is due on June 1.The note contains an acceleration clause.Consequently,Nathan has the absolute right to receive payment before June 1 if he wants.

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.

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?

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.

Shoshanna drafted a complete cheque and made it payable to bearer.She placed it in her desk drawer.She intended to give it as a prize to whichever student achieved the highest grade in her business law class.The cheque was stolen.After passing through several hands,it came into Ethan's possession.Which of the following statements is TRUE?

When writing a cheque made out to Austin,Walter left visible spaces between the numbers when he wrote them down.As a result,Austin added an extra 7 in between two of the numbers on the cheque costing Walter $7000 more than he intended to be withdrawn from his chequing account.Which of the following is true?

Alpha Corp appears to be the named payee of a cheque drawn by Ultimate Inc.Ultimate,however,insists that that piece of paper cannot possibly be treated as a valid cheque under the Bills of Exchange Act.That is TRUE if

Maxim received a cheque that was specially endorsed to him under several conditions.Alexa then acquired that same cheque from Maxim under the same conditions,and Tori then acquired it from Alexa with those same conditions.Albert was the last and final person to acquire the cheque which he received from Tori with the same conditions attached.If none of the individuals listed above were involved with fraudulent or illegal activity,which of them other than Maxim were holders in due course?

Jacob Benito runs a business based in Norway that sells the steel used in hockey blades.Jacob sold $50 000 worth of steel to Wayne Lemieux of Canada on August 8,2006.The two parties agreed that the $50 000 would not be due until October 8,2006 and Wayne arranged for the payment to be made through his line of credit at ABC Trust Company.Which of the following is true?

On June 1,Rituparna bought a widget from Joel.The price was $75 000.On that same day,she gave him a bill of exchange for that amount that was drawn on the Bank of Brandon.Which of the following statements is TRUE?

Natalia has a chequing account at the Bank of Victoria.It contains a balance of $3000.Natalia bought a scooter from Edgar for $1000.He wants to have a cheque in bearer form.That desire can be achieved if

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

When Lance made a cheque payable to Giorgio and handed it to him,he noticed Giorgio signed his own name on the back of that cheque and indicated the money be paid to Derek Shallins.Which of the following has occurred?

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?

Identify and briefly explain three major differences between a negotiable instrument and a regular contract.

Melinda is the holder in due course of a cheque drawn on Tyson's bank account.She therefore believes that she is entitled to receive payment from Tyson.Tyson,however,believes that he has a good defence to her claim.That will be TRUE if Tyson can prove the defence of

Tara created a cheque for $5000 that was payable to bearer.She delivered it to Simon.Simon negotiated it to Melanie,who then negotiated it to Oscar,who then negotiated it to Mike.While Melanie had possession of the cheque,she altered it so that it now appears to be a cheque for $25 000.Which of the following statements is TRUE?