Question 1

A negotiation is void if the transaction in which it occurs is void.

Accepted Answer

A) True 
 B)False

Question 2

Miller does the payroll for XYZ Company.In between the last names of Adams and Bates, he inserts the name Appleton and makes out a weekly paycheck in that name.He keeps the check for himself, signing "Appleton" and cashing it at a local bank.Auditors discovered the fake payee many months later.May XYZ require the bank to recredit?

Accepted Answer

A) No, because of the holder rule. 
B) No, because Miller is an XYZ employee, and the fictitious payee rule applies. 
C) Yes, because the indorsement is forged. 
D) Yes, because the check was, in effect, stolen. 
A) No, because of the holder rule. 
B) No, because Miller is an XYZ employee, and the fictitious payee rule applies. 
C) Yes, because the indorsement is forged. 
D) Yes, because the check was, in effect, stolen.

Question 3

Every indorsement is either blank or special.

Accepted Answer

A) True 
 B)False

Question 4

In which of the following situations is the person not a holder?

Accepted Answer

A) Julie has possession of an instrument "Payable to Martin" that has not been indorsed by Martin. 
B) Sean has possession of a check "Payable to the order of Tonya" which is indorsed with only Tonya's name. 
C) Olsen stole a check that was indorsed in blank. 
D) Wanda found a check "Payable to the order of Cash." 
E) None of these situations involve a holder. 
A) Julie has possession of an instrument "Payable to Martin" that has not been indorsed by Martin. 
B) Sean has possession of a check "Payable to the order of Tonya" which is indorsed with only Tonya's name. 
C) Olsen stole a check that was indorsed in blank. 
D) Wanda found a check "Payable to the order of Cash." 
E) None of these situations involve a holder.

Question 5

Federal Reserve Board guidelines for checks:

Accepted Answer

A) require indorsements to be in blue or black ink. 
B) must be followed or the check will not go through the banking system. 
C) require bank indorsements to be made within 2 inches of the left edge of the back of the check. 
D) Both (a) and (c). 
A) require indorsements to be in blue or black ink. 
B) must be followed or the check will not go through the banking system. 
C) require bank indorsements to be made within 2 inches of the left edge of the back of the check. 
D) Both (a) and (c).

Question 6

A qualified indorsement plus delivery would transfer title to the indorsee.

Accepted Answer

A) True 
 B)False

Question 7

What is the effect of a qualified indorsement and a restrictive indorsement?

Accepted Answer

A qualified indorsement, such as "withou

Question 8

Lily drew a check on First Bank payable to Shelley.Lily signed the check in the normal place at the bottom, right side of the check.Glenn signed the check at the bottom left of the front of the check.In what capacity will the Code interpret Glenn to have signed? Will Glenn be able to introduce parol evidence to establish his intent?

Accepted Answer

Customarily, indorsements are made on th

Question 9

A negotiation may be valid to transfer the instrument even under which of the following condition(s)?

Accepted Answer

A) The negotiation is made by an infant. 
B) The negotiation is made by a person without capacity. 
C) The negotiation is part of an illegal transaction. 
D) All of the above. 
E) None of the above. 
A) The negotiation is made by an infant. 
B) The negotiation is made by a person without capacity. 
C) The negotiation is part of an illegal transaction. 
D) All of the above. 
E) None of the above.

Question 10

The transfer of commercial paper in such a manner that the transferee becomes a holder is known as:

Accepted Answer

A) assignment. 
B) negotiation. 
C) indorsement. 
D) accommodation. 
A) assignment. 
B) negotiation. 
C) indorsement. 
D) accommodation.

Question 11

Is the negotiation of an instrument ever valid even though the transaction in which it occurs is voidable or even void? Explain.

Accepted Answer

Yes, the negotiation of an instrument is

Question 12

Identify the type of indorsement each of the following represents.
a.Pay to Bill, for collection.
b.Pay to the order of The American Bank for deposit only.
c.Pay to Albert, without recourse.
d.John Smith.

Accepted Answer

a.Restrictive, speci

Question 13

Under the shelter rule, the transferee gets the rights of the transferor even if the transfer is not for value.

Accepted Answer

A) True 
 B)False

Question 14

An indorsement "Pay Alice Adams" is an assignment rather than a negotiation since it lacks words of negotiability.

Accepted Answer

A) True 
 B)False

Question 15

The principal advantage of negotiable instruments is their legitimacy.

Accepted Answer

A) True 
 B)False

Question 16

A negotiation can be effective to transfer an instrument even if made by a person without capacity.

Accepted Answer

A) True 
 B)False

Question 17

If the instrument is order paper, how can a person become a holder?

Accepted Answer

A) Transfer of its possession. 
B) Its indorsement by the appropriate parties. 
C) Both (a) and (b) are necessary. 
D) None of the above. 
A) Transfer of its possession. 
B) Its indorsement by the appropriate parties. 
C) Both (a) and (b) are necessary. 
D) None of the above.

Question 18

Marty Sandidge wrote a check payable to "Charles Saxon" when the payee's real name was spelled "Charles Saxton." In order to obtain payment, Charles:

Accepted Answer

A) must have Marty void the check and rewrite another check with Charles's name spelled correctly. 
B) may be required by a person taking the instrument for value to sign both "Charles Saxon" and the correct spelling of his name. 
C) must sign only his real name with the correct spelling or he will be liable for forgery. 
D) must sign only "Charles Saxon" since that was the name on check. 
A) must have Marty void the check and rewrite another check with Charles's name spelled correctly. 
B) may be required by a person taking the instrument for value to sign both "Charles Saxon" and the correct spelling of his name. 
C) must sign only his real name with the correct spelling or he will be liable for forgery. 
D) must sign only "Charles Saxon" since that was the name on check.

Question 19

Marie is the bookkeeper for the Buildco Construction Company.She makes out the payroll; prepares all of the payroll checks and reconciles the bank statements for the firm.She decides to increase her income by padding the payroll; accordingly, she makes out a check in the name of someone who does not exist.She then indorses the check with the payee's name and her name and cashes the check herself at First Bank where the company has its account.Under the fictitious payee rule, Buildco and not the bank will be liable for this check.

Accepted Answer

A) True 
 B)False

Question 20

A transferee acquires the rights the transferor had in a(n):

Accepted Answer

A) assignment. 
B) negotiation. 
C) Both (a) and (b). 
D) Neither (a) nor (b) unless expressly stated when the transfer was made. 
A) assignment. 
B) negotiation. 
C) Both (a) and (b). 
D) Neither (a) nor (b) unless expressly stated when the transfer was made.

Exam 25: Transfer

A negotiation is void if the transaction in which it occurs is void.

Every indorsement is either blank or special.

In which of the following situations is the person not a holder?

Federal Reserve Board guidelines for checks:

A qualified indorsement plus delivery would transfer title to the indorsee.

What is the effect of a qualified indorsement and a restrictive indorsement?

A negotiation may be valid to transfer the instrument even under which of the following condition(s)?

The transfer of commercial paper in such a manner that the transferee becomes a holder is known as:

Is the negotiation of an instrument ever valid even though the transaction in which it occurs is voidable or even void? Explain.

Identify the type of indorsement each of the following represents. a.Pay to Bill, for collection. b.Pay to the order of The American Bank for deposit only. c.Pay to Albert, without recourse. d.John Smith.

Under the shelter rule, the transferee gets the rights of the transferor even if the transfer is not for value.

An indorsement "Pay Alice Adams" is an assignment rather than a negotiation since it lacks words of negotiability.

The principal advantage of negotiable instruments is their legitimacy.

A negotiation can be effective to transfer an instrument even if made by a person without capacity.

If the instrument is order paper, how can a person become a holder?

Marty Sandidge wrote a check payable to "Charles Saxon" when the payee's real name was spelled "Charles Saxton." In order to obtain payment, Charles:

A transferee acquires the rights the transferor had in a(n):

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

Form and Content

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

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Accountants Legal Liability

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International Business Law

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

Interests in Real Property

Transfer and Control of Real Property

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