Question 1

Mort negotiates an instrument to Nadia. 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. B

Question 2

An instrument is defective if it has been previously dishonored.

Accepted Answer

A) True 
 B)False  True

Question 3

When an instrument is transferred by negotiation, the transferee becomes a holder.

Accepted Answer

A) True 
 B)False  True

Question 4

Allie signs a check payable to Bess, who indorses the back, gives it to County Credit Union (CCU), and receives cash. The transfer of the check from Bess to CCU is​

Accepted Answer

A)  ​an assignment. 
B)  ​a negotiation. 
C)  ​none of the choices. 
D)  ​a sale. 
A)  ​an assignment. 
B)  ​a negotiation. 
C)  ​none of the choices. 
D)  ​a sale.

Question 5

Jill, in good faith and for value, gets from Kiley a negotiable bearer instrument. Jill does not know that Kiley stole the instrument. Jill is​

Accepted Answer

A)  an HDC. 
B)  ​not an HDC, because Kiley did not acquire the instrument for value. 
C)  ​not an HDC, because Kiley did not acquire the instrument in good faith. 
D)  ​not an HDC, because the instrument is a bearer instrument. 
A)  an HDC. 
B)  ​not an HDC, because Kiley did not acquire the instrument for value. 
C)  ​not an HDC, because Kiley did not acquire the instrument in good faith. 
D)  ​not an HDC, because the instrument is a bearer instrument.

Question 6

At 1A.M., on the sidewalk in front of EZ Credit Corporation, which is closed, Frank buys a $500 promissory note for $50 from Greg. When presented with Frank's demand for payment, Diane, the maker of the note, could successfully claim that Frank​

Accepted Answer

A)  ​acquired the note with notice that it was overdue. 
B)  ​did not acquire the instrument in good faith. 
C)  ​did not give value for the instrument. 
D)  ​none of the choices. 
A)  ​acquired the note with notice that it was overdue. 
B)  ​did not acquire the instrument in good faith. 
C)  ​did not give value for the instrument. 
D)  ​none of the choices.

Question 7

Connie transfers a note by signing it and delivering it to Dana. Dana is​

Accepted Answer

A)  ​an indorser. 
B)  ​an indorsee. 
C)  ​a drafter. 
D)  ​a promisor. 
A)  ​an indorser. 
B)  ​an indorsee. 
C)  ​a drafter. 
D)  ​a promisor.

Question 8

Jess receives a check from Kelly. Without Jess's knowledge, Leo indorses it in his own name and deposits it in his account at Metro Bank. In Jess's subsequent suit against the bank for the money, the court will most likely rule in favor of​

Accepted Answer

A)  ​Jess, because Leo's signature is not authorized. 
B)  ​Jess, because Metro Bank is not a holder in due course. 
C)  ​Metro Bank, because Leo's signature is not authorized. 
D)  ​Metro Bank, because it is a holder in due course. 
A)  ​Jess, because Leo's signature is not authorized. 
B)  ​Jess, because Metro Bank is not a holder in due course. 
C)  ​Metro Bank, because Leo's signature is not authorized. 
D)  ​Metro Bank, because it is a holder in due course.

Question 9

Sergio makes a gift of a check to Todd who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Todd is​

Accepted Answer

A)  ​none of the choices. 
B)  ​an assignee. 
C)  ​an ordinary holder. 
D)  ​an ordinary holder in due course. 
A)  ​none of the choices. 
B)  ​an assignee. 
C)  ​an ordinary holder. 
D)  ​an ordinary holder in due course.

Question 10

Any irregularity on the face of an instrument that calls into question its validity will bar HDC status.

Accepted Answer

A) True 
 B)False

Question 11

To avoid the risk of loss from theft, a holder may convert a blank indorsement to a special indorsement.

Accepted Answer

A) True 
 B)False

Question 12

Gwen signs a check payable to Hart and gives it to him. Hart indorses the back, and transfers the check to Ingrid. To negotiate the check to Jaime, Ingrid must​

Accepted Answer

A)  ​write "Ingrid" on the back. 
B)  ​write "pay to the order of Jaime [signed] Ingrid" on the back. 
C)  ​deliver the check to Jaime. 
D)  ​obtain Jaime's signature on the back. 
A)  ​write "Ingrid" on the back. 
B)  ​write "pay to the order of Jaime [signed] Ingrid" on the back. 
C)  ​deliver the check to Jaime. 
D)  ​obtain Jaime's signature on the back.

Question 13

Berton transfers a draft by signing it and delivering it to Cormac. Berton is​

Accepted Answer

A)  ​an indorser. 
B)  ​an indorsee. 
C)  ​a drafter. 
D)  ​a promisor. 
A)  ​an indorser. 
B)  ​an indorsee. 
C)  ​a drafter. 
D)  ​a promisor.

Question 14

Calvert buys a promissory note from Darin. The note is due on December 5. December 5 is a Sunday. The note is​

Accepted Answer

A)  ​payable anytime the week of December 6. 
B)  ​payable December 6. 
C)  ​payable on December 5 only. 
D)  ​considered defective. 
A)  ​payable anytime the week of December 6. 
B)  ​payable December 6. 
C)  ​payable on December 5 only. 
D)  ​considered defective.

Question 15

Doyle gives a check to eMarket Finance to buy 100 shares of stock in FabNu Corporation for Doyle. The price of the shares is constantly fluctuating. eMarket asks Doyle to leave the amount of the check blank and allow it to fill in the price when making the purchase. Doyle agrees. eMarket buys the stock when the price is $4,000, but fills in the check for $5,000. The check is negotiated as payment for a $5,000 debt to Guido & Hollis Accountants (G&H), which takes the check in good faith and without notice of eMarket's act. G&H later learns that eMarket was not authorized to fill in the check for $1,000 over the price. Is G&H an HDC? If so, for how much?

Accepted Answer

G&H is an HDC to the extent of $5,000, t

Question 16

Idina wants to buy a promissory note from Jo. 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 17

A holder takes an instrument for value if he or she inherits an instrument.

Accepted Answer

A) True 
 B)False

Question 18

Under the UCC, a transfer of rights under a contract is a negotiation.

Accepted Answer

A) True 
 B)False

Question 19

It is possible for a person who does not qualify as an HDC to acquire the rights and privileges of an HDC.

Accepted Answer

A) True 
 B)False

Question 20

Raul wants to transfer a check to Schmidt. The check is defective if it​

Accepted Answer

A)  ​has been previously dishonored. 
B)  ​contains handwritten terms. 
C)  ​is undated, antedated, or postdated. 
D)  ​all of the choices. 
A)  ​has been previously dishonored. 
B)  ​contains handwritten terms. 
C)  ​is undated, antedated, or postdated. 
D)  ​all of the choices.

Exam 16: Transferability and Holder in Due Course

Mort negotiates an instrument to Nadia. Negotiation is the transfer of an instrument​

An instrument is defective if it has been previously dishonored.

When an instrument is transferred by negotiation, the transferee becomes a holder.

Allie signs a check payable to Bess, who indorses the back, gives it to County Credit Union (CCU), and receives cash. The transfer of the check from Bess to CCU is​

Jill, in good faith and for value, gets from Kiley a negotiable bearer instrument. Jill does not know that Kiley stole the instrument. Jill is​

At 1A.M., on the sidewalk in front of EZ Credit Corporation, which is closed, Frank buys a $500 promissory note for $50 from Greg. When presented with Frank's demand for payment, Diane, the maker of the note, could successfully claim that Frank​

Connie transfers a note by signing it and delivering it to Dana. Dana is​

Jess receives a check from Kelly. Without Jess's knowledge, Leo indorses it in his own name and deposits it in his account at Metro Bank. In Jess's subsequent suit against the bank for the money, the court will most likely rule in favor of​

Sergio makes a gift of a check to Todd who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Todd is​

Any irregularity on the face of an instrument that calls into question its validity will bar HDC status.

To avoid the risk of loss from theft, a holder may convert a blank indorsement to a special indorsement.

Gwen signs a check payable to Hart and gives it to him. Hart indorses the back, and transfers the check to Ingrid. To negotiate the check to Jaime, Ingrid must​

Berton transfers a draft by signing it and delivering it to Cormac. Berton is​

Calvert buys a promissory note from Darin. The note is due on December 5. December 5 is a Sunday. The note is​

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

A holder takes an instrument for value if he or she inherits an instrument.

Under the UCC, a transfer of rights under a contract is a negotiation.

It is possible for a person who does not qualify as an HDC to acquire the rights and privileges of an HDC.

Raul wants to transfer a check to Schmidt. The check is defective if it​

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Mort negotiates an instrument to Nadia. Negotiation is the transfer of an instrument

Allie signs a check payable to Bess, who indorses the back, gives it to County Credit Union (CCU), and receives cash. The transfer of the check from Bess to CCU is

Jill, in good faith and for value, gets from Kiley a negotiable bearer instrument. Jill does not know that Kiley stole the instrument. Jill is

At 1A.M., on the sidewalk in front of EZ Credit Corporation, which is closed, Frank buys a $500 promissory note for $50 from Greg. When presented with Frank's demand for payment, Diane, the maker of the note, could successfully claim that Frank

Connie transfers a note by signing it and delivering it to Dana. Dana is

Jess receives a check from Kelly. Without Jess's knowledge, Leo indorses it in his own name and deposits it in his account at Metro Bank. In Jess's subsequent suit against the bank for the money, the court will most likely rule in favor of

Sergio makes a gift of a check to Todd who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Todd is

Gwen signs a check payable to Hart and gives it to him. Hart indorses the back, and transfers the check to Ingrid. To negotiate the check to Jaime, Ingrid must

Berton transfers a draft by signing it and delivering it to Cormac. Berton is

Calvert buys a promissory note from Darin. The note is due on December 5. December 5 is a Sunday. The note is

Raul wants to transfer a check to Schmidt. The check is defective if it