Question 1

An order to pay money drawn on a bank and payable on demand is a:

Accepted Answer

A) check. 
B) trade acceptance. 
C) certificate of deposit. 
D) promissory note. 
A) check. 
B) trade acceptance. 
C) certificate of deposit. 
D) promissory note.

Question 2

Who are the parties to checks and notes?

Accepted Answer

A check involves three parties.The drawe

Question 3

Identify which of the following meet the Article 3 negotiability requirement of being payable at a definite time: (a) A note payable "on or before June 14, 2012." (b) A dated instrument payable "30 days after date." (c) An undated instrument payable "30 days after date." (d) An instrument payable "when Baxter is promoted to plant manager." (e) A note payable on December 31, subject to acceleration by the holder." (f) A note granting the holder the option to extend maturity of the instrument for an indefinite period.

Accepted Answer

Illustrations (a), (b), (e), and (f) are

Question 4

Postdating an instrument will destroy its negotiability.

Accepted Answer

A) True 
 B)False

Question 5

An "X" or a thumbprint could constitute a signature within the meaning of the term in the Code.

Accepted Answer

A) True 
 B)False

Question 6

An instrument is payable to order if it is payable:

Accepted Answer

A) to the order of an identified person. 
B) to an identified person or order. 
C) Both of the above. 
D) None of the above. 
A) to the order of an identified person. 
B) to an identified person or order. 
C) Both of the above. 
D) None of the above.

Question 7

The court in Cooperative Centrale Raiffeisen-Boerenleenbank B.A.v.Bailey found:

Accepted Answer

A) whether an instrument is negotiable is a question of fact. 
B) whether an instrument is negotiable is to be determined without reference to the intent of the parties. 
C) the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability. 
D) the question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent. 
A) whether an instrument is negotiable is a question of fact. 
B) whether an instrument is negotiable is to be determined without reference to the intent of the parties. 
C) the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability. 
D) the question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent.

Question 8

A cashier's check is a check drawn by a bank upon itself to the order of a named payee.

Accepted Answer

A) True 
 B)False

Question 9

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.

Accepted Answer

A) True 
 B)False

Question 10

A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment.Should the drawer pay Sally?

Accepted Answer

A) No, unless Joe Jones's name is crossed off. 
B) No, unless "bearer" is handwritten. 
C) Yes, since the word "or" is contained in the instrument, either will do. 
D) No, the terminology is ambiguous and therefore must be paid only to the order of Joe Jones. 
A) No, unless Joe Jones's name is crossed off. 
B) No, unless "bearer" is handwritten. 
C) Yes, since the word "or" is contained in the instrument, either will do. 
D) No, the terminology is ambiguous and therefore must be paid only to the order of Joe Jones.

Question 11

Under the Check Clearing for the 21st Century Act:

Accepted Answer

A) a new negotiable instrument, called an IRD, was created. 
B) banks are required to accept checks in electronic form. 
C) Both of the above. 
D) None of the above. 
A) a new negotiable instrument, called an IRD, was created. 
B) banks are required to accept checks in electronic form. 
C) Both of the above. 
D) None of the above.

Question 12

Jones signed a 90-day note promising to pay $1,000 plus interest.The note states that interest is to be based on a variable, published rate external to the note.The sum the borrower must repay is uncertain, so the note is not negotiable under Revised Article 3.

Accepted Answer

A) True 
 B)False

Question 13

The drawee is the individual who signs a check and promises to pay.

Accepted Answer

A) True 
 B)False

Question 14

Notes and certificates of deposit are orders to pay money.

Accepted Answer

A) True 
 B)False

Question 15

A promissory note is an instrument that involves three parties in three capacities.

Accepted Answer

A) True 
 B)False

Question 16

Only a bank may serve as the maker of a certificate of a deposit.

Accepted Answer

A) True 
 B)False

Question 17

By the concept of ____________, a transferee of a negotiable instrument can acquire greater rights than the transferor had.

Accepted Answer

A) holder in due course 
B) assignment 
C) commercial utility 
D) sight drafts 
A) holder in due course 
B) assignment 
C) commercial utility 
D) sight drafts

Question 18

Sam writes a check drawn on his account at First Bank to State University to pay his tuition.In this case:

Accepted Answer

A) Sam is the drawer. 
B) the university is the drawee. 
C) the bank is the payee. 
D) Sam is the maker. 
A) Sam is the drawer. 
B) the university is the drawee. 
C) the bank is the payee. 
D) Sam is the maker.

Question 19

Although the name of Article 3 has been changed from "Commercial Paper" to "Negotiable Instruments," the 1990 Revision of the Code maintains the basic scope and content of prior Article 3.

Accepted Answer

A) True 
 B)False

Question 20

References to other agreements in negotiable instruments:

Accepted Answer

A) destroy negotiability unless the recital makes the instrument subject to, or governed by, the terms of another agreement. 
B) do not destroy negotiability in any circumstances. 
C) do not destroy negotiability unless the recital makes the instrument subject to or governed by the terms of another agreement. 
D) None of the above. 
A) destroy negotiability unless the recital makes the instrument subject to, or governed by, the terms of another agreement. 
B) do not destroy negotiability in any circumstances. 
C) do not destroy negotiability unless the recital makes the instrument subject to or governed by the terms of another agreement. 
D) None of the above.

Exam 24: Form and Content

An order to pay money drawn on a bank and payable on demand is a:

Who are the parties to checks and notes?

Postdating an instrument will destroy its negotiability.

An "X" or a thumbprint could constitute a signature within the meaning of the term in the Code.

An instrument is payable to order if it is payable:

The court in Cooperative Centrale Raiffeisen-Boerenleenbank B.A.v.Bailey found:

A cashier's check is a check drawn by a bank upon itself to the order of a named payee.

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.

A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment.Should the drawer pay Sally?

Under the Check Clearing for the 21st Century Act:

Jones signed a 90-day note promising to pay $1,000 plus interest.The note states that interest is to be based on a variable, published rate external to the note.The sum the borrower must repay is uncertain, so the note is not negotiable under Revised Article 3.

The drawee is the individual who signs a check and promises to pay.

Notes and certificates of deposit are orders to pay money.

A promissory note is an instrument that involves three parties in three capacities.

Only a bank may serve as the maker of a certificate of a deposit.

By the concept of ____________, a transferee of a negotiable instrument can acquire greater rights than the transferor had.

Sam writes a check drawn on his account at First Bank to State University to pay his tuition.In this case:

Although the name of Article 3 has been changed from "Commercial Paper" to "Negotiable Instruments," the 1990 Revision of the Code maintains the basic scope and content of prior Article 3.

References to other agreements in negotiable instruments:

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Transfer

Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Nature and Formation of Corporations

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, Property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

Trusts and Wills

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