Question 1

List and generally explain the warranties on presentment.

Accepted Answer

Any party who pays or accepts an instrum

Question 2

Indorsers of all instruments incur primary liability on the instrument.

Accepted Answer

A) True 
 B)False

Question 3

Discuss the reasons (explained in the "Business Law in Action" feature in the textbook) most banks instruct their tellers to obtain indorsements on all checks, including those made payable to "Cash."

Accepted Answer

Although checks written payable to "Cash

Question 4

Who is primarily liable on a note?

Accepted Answer

A) The maker. 
B) The indorsers. 
C) The drawee bank. 
D) The holder. 
A) The maker. 
B) The indorsers. 
C) The drawee bank. 
D) The holder.

Question 5

Which of the following is primarily liable for a note?

Accepted Answer

A) The maker. 
B) An indorser. 
C) The drawer. 
D) The payee. 
A) The maker. 
B) An indorser. 
C) The drawer. 
D) The payee.

Question 6

Presentment is a demand made by or on behalf of a person entitled to enforce the instrument for:

Accepted Answer

A) payment by the drawee or other party obligated to pay the instrument. 
B) acceptance by the drawee of a draft. 
C) Both (a) and (b) are correct. 
D) None of the above. 
A) payment by the drawee or other party obligated to pay the instrument. 
B) acceptance by the drawee of a draft. 
C) Both (a) and (b) are correct. 
D) None of the above.

Question 7

A waiver of presentment will waive the requirement of notice of dishonor as well.

Accepted Answer

A) True 
 B)False

Question 8

In which of the following situations has conversion NOT occurred?

Accepted Answer

A) When an instrument is paid on a forged indorsement. 
B) When a drawee to whom a draft is delivered for acceptance properly returns it upon request. 
C) When any person to whom an instrument is delivered for payment refuses on demand to pay or to return it. 
D) When a drawee to whom a draft is delivered for payment refuses to return it on demand. 
A) When an instrument is paid on a forged indorsement. 
B) When a drawee to whom a draft is delivered for acceptance properly returns it upon request. 
C) When any person to whom an instrument is delivered for payment refuses on demand to pay or to return it. 
D) When a drawee to whom a draft is delivered for payment refuses to return it on demand.

Question 9

Franz signs a $1,000 note payable to ABC Bank.If, to help Franz get the loan approved, Amy also signs the note as an accommodation maker:

Accepted Answer

A) Amy's liability is the same as that of an accommodation indorser on a check. 
B) the liability of each party to the bank is, Franz $500 and Amy $500. 
C) Amy has secondary liability on the note. 
D) Amy and Franz both have primary liability on the note. 
A) Amy's liability is the same as that of an accommodation indorser on a check. 
B) the liability of each party to the bank is, Franz $500 and Amy $500. 
C) Amy has secondary liability on the note. 
D) Amy and Franz both have primary liability on the note.

Question 10

Arthur is the payee of a negotiable promissory note on which Brian is the maker.Arthur indorses the note in blank and delivers it to Clark, who then transfers it to David without indorsement.David presents it to Brian for payment when it becomes due, but Brian claims he signed the note based upon fraud in the inducement and refuses to pay.
a.Who is primarily liable on the instrument? Who is secondarily liable on the instrument?
b.Who has warranty liability? Why? Explain.
c.From whom can David try to collect now that Brian refuses to pay?

Accepted Answer

a.Brian is primarily liable.Arthur is se

Question 11

The signature of the maker of a note may be typewritten or signed by means of a signature stamp so long as it represents a present intention to authenticate the instrument.

Accepted Answer

A) True 
 B)False

Question 12

An acceptor should always indicate on the instrument the amount accepted.

Accepted Answer

A) True 
 B)False

Question 13

The law imposes contractual liability on those who sign, or have a representative agent sign, a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 14

Bob, a guest in Jim's house, goes into Jim's desk and writes a check to himself on Jim's checking account, forging Jim's signature.He indorses the check "Bob" and presents it to Jim's bank for payment.If the bank pays, can it collect from Jim's account?

Accepted Answer

A) Yes, because Bob is the real payee. 
B) Yes, because Jim's name is on the check. 
C) No, because bank should have known the signature is forged. 
D) No, because Jim did not know of the check. 
A) Yes, because Bob is the real payee. 
B) Yes, because Jim's name is on the check. 
C) No, because bank should have known the signature is forged. 
D) No, because Jim did not know of the check.

Question 15

Authorized agents cannot execute negotiable instruments on behalf of their principals.

Accepted Answer

A) True 
 B)False

Question 16

In Davis v.Watson Brothers Plumbing, Inc., the court found that Davis was not a "holder" of the check.

Accepted Answer

A) True 
 B)False

Question 17

If a holder presents a note for payment to the maker, which one of the following warranties is given?

Accepted Answer

A) All indorsements are genuine. 
B) All signatures are genuine. 
C) The holder has no knowledge that any indorsements are forged. 
D) The holder is entitled to enforce the note or is authorized to obtain payment on behalf of the person entitled to enforce the note. 
E) All of the above. 
A) All indorsements are genuine. 
B) All signatures are genuine. 
C) The holder has no knowledge that any indorsements are forged. 
D) The holder is entitled to enforce the note or is authorized to obtain payment on behalf of the person entitled to enforce the note. 
E) All of the above.

Question 18

Unauthorized signatures include both forgeries and signatures made by an agent without authority.

Accepted Answer

A) True 
 B)False

Question 19

Warranties of a person obtaining payment or acceptance of an unaccepted draft include:

Accepted Answer

A) the warrantor is a person entitled to enforce the draft. 
B) the warrantor has no knowledge that the drawer's signature is unauthorized. 
C) the draft has not been altered. 
D) All of the above. 
A) the warrantor is a person entitled to enforce the draft. 
B) the warrantor has no knowledge that the drawer's signature is unauthorized. 
C) the draft has not been altered. 
D) All of the above.

Question 20

Parties that are usually secondarily liable for an instrument are:
a.indorsers and drawers.
b.makers and indorsers.
c.makers and acceptors.
d.acceptors and drawers.

Accepted Answer

a.(1) The transferor has good title to t

Exam 27: Liability of Parties

List and generally explain the warranties on presentment.

Indorsers of all instruments incur primary liability on the instrument.

Discuss the reasons (explained in the "Business Law in Action" feature in the textbook) most banks instruct their tellers to obtain indorsements on all checks, including those made payable to "Cash."

Who is primarily liable on a note?

Which of the following is primarily liable for a note?

Presentment is a demand made by or on behalf of a person entitled to enforce the instrument for:

A waiver of presentment will waive the requirement of notice of dishonor as well.

In which of the following situations has conversion NOT occurred?

Franz signs a $1,000 note payable to ABC Bank.If, to help Franz get the loan approved, Amy also signs the note as an accommodation maker:

The signature of the maker of a note may be typewritten or signed by means of a signature stamp so long as it represents a present intention to authenticate the instrument.

An acceptor should always indicate on the instrument the amount accepted.

The law imposes contractual liability on those who sign, or have a representative agent sign, a negotiable instrument.

Bob, a guest in Jim's house, goes into Jim's desk and writes a check to himself on Jim's checking account, forging Jim's signature.He indorses the check "Bob" and presents it to Jim's bank for payment.If the bank pays, can it collect from Jim's account?

Authorized agents cannot execute negotiable instruments on behalf of their principals.

In Davis v.Watson Brothers Plumbing, Inc., the court found that Davis was not a "holder" of the check.

If a holder presents a note for payment to the maker, which one of the following warranties is given?

Unauthorized signatures include both forgeries and signatures made by an agent without authority.

Warranties of a person obtaining payment or acceptance of an unaccepted draft include:

Parties that are usually secondarily liable for an instrument are: a.indorsers and drawers. b.makers and indorsers. c.makers and acceptors. d.acceptors and drawers.

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

Transfer

Holder in Due Course

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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