Question 1

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment.

Accepted Answer

A) True 
 B)False  False

Question 2

An instrument is dishonored when the party to whom the instrument is presented refuses to pay it.

Accepted Answer

A) True 
 B)False  True

Question 3

Fact Pattern 19-2
​LNG Corporation and Midstates Utility Company enter a contract for a sale of liquefied natural gas. LNG draws a draft unconditionally ordering Midstates Utility to pay $50,000 to LNG's order in sixty days. Midstates Utility signs and dates the draft.
-Refer to Fact Pattern 19-2. On this instrument, LNG is

Accepted Answer

A) the banker. 
B) the drawer. 
C) the maker. 
D) the trader. 
A) the banker. 
B) the drawer. 
C) the maker. 
D) the trader. B

Question 4

Negotiating order instruments requires either delivery or indorsement but not both.

Accepted Answer

A) True 
 B)False

Question 5

Alvin signs a promissory note payable to the order of Borrow & Spend Loan Company. The note states that it is payable "with interest at the legal rate." This note is​

Accepted Answer

A)  ​negotiable. 
B)  ​not negotiable, because it does not specify a rate of interest. 
C)  ​not negotiable, because it is a promissory note. 
D)  ​not negotiable, because it is payable only with interest. 
A)  ​negotiable. 
B)  ​not negotiable, because it does not specify a rate of interest. 
C)  ​not negotiable, because it is a promissory note. 
D)  ​not negotiable, because it is payable only with interest.

Question 6

Emily writes and signs a check payable to "Festival Cinema." Georg, Festival's manager, indorses the check "For deposit only." This is​

Accepted Answer

A)  ​a blank indorsement. 
B)  ​a qualified indorsement. 
C)  ​a restrictive indorsement. 
D)  ​a special indorsement. 
A)  ​a blank indorsement. 
B)  ​a qualified indorsement. 
C)  ​a restrictive indorsement. 
D)  ​a special indorsement.

Question 7

Talia, who is not a Urban Bank customer, attempts to cash a check drawn on the bank. The check is considered dishonored if Urban Bank​

Accepted Answer

A)  ​refuses to pay it. 
B)  ​charges a fee to cash it. 
C)  ​asks Talia for reasonable identification. 
D)  ​asks Talia to sign a receipt for the payment on the check. 
A)  ​refuses to pay it. 
B)  ​charges a fee to cash it. 
C)  ​asks Talia for reasonable identification. 
D)  ​asks Talia to sign a receipt for the payment on the check.

Question 8

Idina wants to buy a promissory note from Jill. The note is due on April 1. To become an HDC, Idina must buy the note​

Accepted Answer

A)  before midnight on April 1. 
B)  before noon on April 1. 
C)  before 8:00 A.M. on April 1 
D)  within thirty days of April 1. 
A)  before midnight on April 1. 
B)  before noon on April 1. 
C)  before 8:00 A.M. on April 1 
D)  within thirty days of April 1.

Question 9

An instrument is not defective simply because it is overdue.

Accepted Answer

A) True 
 B)False

Question 10

An order instrument must identify the payee with certainty.

Accepted Answer

A) True 
 B)False

Question 11

Plumbing & Pipes Supply Company issues a promissory note as a demand instrument with a due date of October 5. QuikPay Loan Company accepts the note. QuikPay has notice that the note is overdue if the firm takes the note​

Accepted Answer

A)  ​after October 5. 
B)  ​before October 5. 
C)  ​on October 5. 
D)  ​at any time. 
A)  ​after October 5. 
B)  ​before October 5. 
C)  ​on October 5. 
D)  ​at any time.

Question 12

To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2045. To be negotiable, this instrument must include the signature of​

Accepted Answer

A)  ​a non-party witness. 
B)  ​Tuna or Tuna's realtor. 
C)  ​Uri. 
D)  ​Verity's chief financial officer. 
A)  ​a non-party witness. 
B)  ​Tuna or Tuna's realtor. 
C)  ​Uri. 
D)  ​Verity's chief financial officer.

Question 13

Fact Pattern 19-2
​LNG Corporation and Midstates Utility Company enter a contract for a sale of liquefied natural gas. LNG draws a draft unconditionally ordering Midstates Utility to pay $50,000 to LNG's order in sixty days. Midstates Utility signs and dates the draft.
-Builders Exchange, Inc., issues an instrument in favor of Custom Construction Company. For the instrument to be negotiable, it must​

Accepted Answer

A)  ​be a conditional promise or order to pay. 
B)  ​be payable on demand or at a specific time. 
C)  ​be signed by the payee. 
D)  ​recite the consideration given in exchange for it. 
A)  ​be a conditional promise or order to pay. 
B)  ​be payable on demand or at a specific time. 
C)  ​be signed by the payee. 
D)  ​recite the consideration given in exchange for it.

Question 14

Lewis makes a note payable to Milly. She indorses the back of the note and negotiates it to Negotiable Investments, Inc. Primarily liable on the note is

Accepted Answer

A)  ​none of the choices. 
B)  ​Milly. 
C)  ​Negotiable Investments. 
D)  ​Lewis. 
A)  ​none of the choices. 
B)  ​Milly. 
C)  ​Negotiable Investments. 
D)  ​Lewis.

Question 15

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC under any circumstances.

Accepted Answer

A) True 
 B)False

Question 16

Mortimer negotiates an instrument to Nelson. Negotiation is the transfer of an instrument

Accepted Answer

A)  ​for valuable consideration under a contract. 
B)  ​in such form that the transferee becomes a holder. 
C)  ​pursuant to preliminary contract discussions. 
D)  ​without the payment of a recognized medium of exchange. 
A)  ​for valuable consideration under a contract. 
B)  ​in such form that the transferee becomes a holder. 
C)  ​pursuant to preliminary contract discussions. 
D)  ​without the payment of a recognized medium of exchange.

Question 17

A transfer by assignment can make it possible for a transferee to receive more rights in the instrument than the prior possessor had.

Accepted Answer

A) True 
 B)False

Question 18

An indorser who does not wish to be liable on an instrument can use a qualified indorsement.

Accepted Answer

A) True 
 B)False

Question 19

With respect to negotiability, the location of a signature on a document is important.

Accepted Answer

A) True 
 B)False

Question 20

On the back of a check payable to Nero, he writes "Pay to Odell, without recourse" and signs it. This

Accepted Answer

A)  ​does not effect the check's negotiability or any party's liability. 
B)  ​relieves Nero of liability on the check. 
C)  ​relieves Odell of liability on the check. 
D)  ​renders the check nonnegotiable. 
A)  ​does not effect the check's negotiability or any party's liability. 
B)  ​relieves Nero of liability on the check. 
C)  ​relieves Odell of liability on the check. 
D)  ​renders the check nonnegotiable.

Exam 19: Negotiable Instruments

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment.

An instrument is dishonored when the party to whom the instrument is presented refuses to pay it.

Negotiating order instruments requires either delivery or indorsement but not both.

Alvin signs a promissory note payable to the order of Borrow & Spend Loan Company. The note states that it is payable "with interest at the legal rate." This note is​

Emily writes and signs a check payable to "Festival Cinema." Georg, Festival's manager, indorses the check "For deposit only." This is​

Talia, who is not a Urban Bank customer, attempts to cash a check drawn on the bank. The check is considered dishonored if Urban Bank​

Idina wants to buy a promissory note from Jill. The note is due on April 1. To become an HDC, Idina must buy the note​

An instrument is not defective simply because it is overdue.

An order instrument must identify the payee with certainty.

Plumbing & Pipes Supply Company issues a promissory note as a demand instrument with a due date of October 5. QuikPay Loan Company accepts the note. QuikPay has notice that the note is overdue if the firm takes the note​

To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2045. To be negotiable, this instrument must include the signature of​

Lewis makes a note payable to Milly. She indorses the back of the note and negotiates it to Negotiable Investments, Inc. Primarily liable on the note is

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC under any circumstances.

Mortimer negotiates an instrument to Nelson. Negotiation is the transfer of an instrument

A transfer by assignment can make it possible for a transferee to receive more rights in the instrument than the prior possessor had.

An indorser who does not wish to be liable on an instrument can use a qualified indorsement.

With respect to negotiability, the location of a signature on a document is important.

On the back of a check payable to Nero, he writes "Pay to Odell, without recourse" and signs it. This

The Legal Environment

Constitutional Law

Courts and Alternative Dispute Resolution

Tort Law

Product Liability

Intellectual Property Rights

Internet Law, Social Media, and Privacy

Criminal Law and Cyber Crime

Business Ethics

Nature and Classification

Agreement

Consideration, Capacity, and Legality

Defenses to Contract Enforceability

Third Party Rights and Discharge

Breach and Remedies

International Law in a Global Economy

The Formation of Sales and Lease Contracts

Performance and Breach of Sales and Lease Contracts

Banking in the Digital Age

Security Interests and Creditors Rights

Bankruptcy

Agency Relationships in Business

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Private Franchises

All Forms of Partnership

Limited Liability Companies and Special Business Forms

Corporations

Investor Protection, Insider Trading, and Corporate Governance

Antitrust Law and Promoting Competition

Consumer and Environmental Law

Liability of Accountants and Other Professionals

Personal Property and Bailments

Real Property and Landlord-Tenant Law

Insurance, Wills, and Trusts

Filters

Alvin signs a promissory note payable to the order of Borrow & Spend Loan Company. The note states that it is payable "with interest at the legal rate." This note is

Emily writes and signs a check payable to "Festival Cinema." Georg, Festival's manager, indorses the check "For deposit only." This is

Talia, who is not a Urban Bank customer, attempts to cash a check drawn on the bank. The check is considered dishonored if Urban Bank

Idina wants to buy a promissory note from Jill. The note is due on April 1. To become an HDC, Idina must buy the note

Plumbing & Pipes Supply Company issues a promissory note as a demand instrument with a due date of October 5. QuikPay Loan Company accepts the note. QuikPay has notice that the note is overdue if the firm takes the note

To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2045. To be negotiable, this instrument must include the signature of