Question 1

The impostor rule is an exception to the general rule that negotiation of any order instrument requires a valid indorsement by the person to whose order the instrument is payable.

Accepted Answer

A) True 
 B)False

Question 2

In the Shearson Lehman Brothers, Inc.v.Wasatch Bank case, the applicable defense was:

Accepted Answer

A) a forged indorsement was ineffective to pass title. 
B) the instrument was assigned rather than negotiated. 
C) the fictitious payee defense. 
D) the impostor rule. 
A) a forged indorsement was ineffective to pass title. 
B) the instrument was assigned rather than negotiated. 
C) the fictitious payee defense. 
D) the impostor rule.

Question 3

If a person paying an instrument subject to the impostor rule fails to exercise ordinary care, the issuer may recover from the payor to the extent the payor's negligence contributed to the loss.

Accepted Answer

A) True 
 B)False

Question 4

A "without recourse" indorsement eliminates all of an indorser's liability.

Accepted Answer

A) True 
 B)False

Question 5

An indorsement "Pay to Jones Construction Company upon completion of the job at No.10 Park Place" is nonnegotiable.

Accepted Answer

A) True 
 B)False

Question 6

One who is in possession of a piece of commercial paper that is drawn, issued, or indorsed to him or to his order or that is indorsed in blank is a(n):

Accepted Answer

A) bearer. 
B) holder. 
C) transferor. 
D) assignee. 
A) bearer. 
B) holder. 
C) transferor. 
D) assignee.

Question 7

An indorsement that says, "Pay to the Order of John Jones, signed Michael Johnson" is a blank indorsement that turns a check into bearer paper.

Accepted Answer

A) True 
 B)False

Question 8

An anomalous indorsement is:

Accepted Answer

A) one that specifically identifies the person to whose order the instrument is payable. 
B) an indorsement made by a person who is not the holder of the instrument. 
C) one that makes the signer liable on the instrument as an indorser. 
D) Both (a) and (b). 
E) Both (b) and (c). 
A) one that specifically identifies the person to whose order the instrument is payable. 
B) an indorsement made by a person who is not the holder of the instrument. 
C) one that makes the signer liable on the instrument as an indorser. 
D) Both (a) and (b). 
E) Both (b) and (c).

Question 9

A holder of an instrument with a blank indorsement may protect herself by writing over the signature of the indorser words identifying herself as the person to whom the instrument is payable.

Accepted Answer

A) True 
 B)False

Question 10

Matt writes on the back of a check, "I assign all of my rights in this instrument to Ronald Stevens." This is a(n):

Accepted Answer

A) qualified indorsement. 
B) assignment without negotiation. 
C) special indorsement. 
D) restrictive indorsement. 
A) qualified indorsement. 
B) assignment without negotiation. 
C) special indorsement. 
D) restrictive indorsement.

Exam 25: Transfer

The impostor rule is an exception to the general rule that negotiation of any order instrument requires a valid indorsement by the person to whose order the instrument is payable.

In the Shearson Lehman Brothers, Inc.v.Wasatch Bank case, the applicable defense was:

If a person paying an instrument subject to the impostor rule fails to exercise ordinary care, the issuer may recover from the payor to the extent the payor's negligence contributed to the loss.

A "without recourse" indorsement eliminates all of an indorser's liability.

An indorsement "Pay to Jones Construction Company upon completion of the job at No.10 Park Place" is nonnegotiable.

One who is in possession of a piece of commercial paper that is drawn, issued, or indorsed to him or to his order or that is indorsed in blank is a(n):

An indorsement that says, "Pay to the Order of John Jones, signed Michael Johnson" is a blank indorsement that turns a check into bearer paper.

An anomalous indorsement is:

A holder of an instrument with a blank indorsement may protect herself by writing over the signature of the indorser words identifying herself as the person to whom the instrument is payable.

Matt writes on the back of a check, "I assign all of my rights in this instrument to Ronald Stevens." This is a(n):

Introduction to Law

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Intentional Torts

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Introduction to Sales and Leases

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Product Liability: Warranties and Strict Liability

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