Question 1

If a lost negotiable instrument is in bearer form at the time of the loss, the finder is entitled to enforce payment.

Accepted Answer

A) True 
 B)False

Question 2

Negotiation of bearer paper requires:​

Accepted Answer

A) ​delivery only. 
B) indorsement only.​ 
C) both indorsement and delivery.​ 
D) neither indorsement nor delivery.​ 
A) ​delivery only. 
B) indorsement only.​ 
C) both indorsement and delivery.​ 
D) neither indorsement nor delivery.​

Question 3

In the case of a check, when the impostor rule applies:

Accepted Answer

A) ​the drawer of the check can successfully raise the defense of the forged indorsement. 
B) the forged indorsement is effective to negotiate the instrument.​ 
C) the forged indorsement is ineffective to negotiate the instrument.​ 
D) the instrument becomes nonnegotiable.​ 
A) ​the drawer of the check can successfully raise the defense of the forged indorsement. 
B) the forged indorsement is effective to negotiate the instrument.​ 
C) the forged indorsement is ineffective to negotiate the instrument.​ 
D) the instrument becomes nonnegotiable.​

Question 4

When a special indorsement is made, the instrument continues to be order paper and may be negotiated only by an indorsement and delivery.

Accepted Answer

A) True 
 B)False

Question 5

A blank indorsement indicates the person to whom the instrument is to be paid-that is, the transferee.

Accepted Answer

A) True 
 B)False

Question 6

A holder is also known as an assignee of the paper

Accepted Answer

A) True 
 B)False

Question 7

A restrictive indorsement specifies the purpose of the indorsement or the use to be made of the paper.

Accepted Answer

A) True 
 B)False

Question 8

The warranties made by an unqualified indorser guarantee that payment of the instrument will be made.

Accepted Answer

A) True 
 B)False

Question 9

A transferor may be able to set aside a negotiation obtained by fraud or duress unless:

Accepted Answer

A) ​a minor is involved. 
B) the negotiation was part of an illegal transaction.​ 
C) the negotiation was beyond the powers of the corporation.​ 
D) the instrument has been acquired in the meantime by a holder in due course who did not know of the misconduct.​ 
A) ​a minor is involved. 
B) the negotiation was part of an illegal transaction.​ 
C) the negotiation was beyond the powers of the corporation.​ 
D) the instrument has been acquired in the meantime by a holder in due course who did not know of the misconduct.​

Question 10

Order paper is negotiated by the indorsement of the holder only.

Accepted Answer

A) True 
 B)False

Question 11

Under the UCC, a negotiation is not effective when it is made by a minor or any other person lacking capacity.

Accepted Answer

A) True 
 B)False

Question 12

A qualified indorsement qualifies the effect of a blank or special indorsement by disclaiming certain liabilities of the indorser to a maker or drawee.

Accepted Answer

A) True 
 B)False

Question 13

An unqualified indorser who receives consideration for the indorsement impliedly warrants all of the following except:​

Accepted Answer

A) ​the warrantor is a person entitled to enforce the instrument. 
B) all signatures on the instrument are authentic and authorized. 
C) ​the instrument has not been altered. 
D) ​the drawer has sufficient funds to cover the check. 
A) ​the warrantor is a person entitled to enforce the instrument. 
B) all signatures on the instrument are authentic and authorized. 
C) ​the instrument has not been altered. 
D) ​the drawer has sufficient funds to cover the check.

Question 14

Indorsements may be classified in terms of whether the indorser has added any words to the indorsement and what those words are.

Accepted Answer

A) True 
 B)False

Question 15

The transferring of an instrument in such a way as to make the transferee the holder of the paper is termed:

Accepted Answer

A) ​an assignment. 
B) a conversion.​ 
C) a sale.​ 
D) a negotiation.​ 
A) ​an assignment. 
B) a conversion.​ 
C) a sale.​ 
D) a negotiation.​

Question 16

An indorsement "Pay to Donald Hames, Cathy Dukes" is not a valid indorsement because it does not contain the words "order" or "bearer."

Accepted Answer

A) True 
 B)False

Question 17

A blank indorsement turns a(n) __________instrument into a(n) __________ instrument.​

Accepted Answer

A) ​negotiable; non-negotiable 
B) non-negotiable; negotiable​ 
C) bearer; order​ 
D) order; bearer​ 
A) ​negotiable; non-negotiable 
B) non-negotiable; negotiable​ 
C) bearer; order​ 
D) order; bearer​

Question 18

A __________ indorsement consists of the signature of the indorser and words specifying the person to whom the indorser makes the instrument payable.​

Accepted Answer

A) ​qualified 
B) restrictive​ 
C) special​ 
D) blank​ 
A) ​qualified 
B) restrictive​ 
C) special​ 
D) blank​

Question 19

Industries Inc., drew a check payable to Gloria Schell and Pippen Tallit in the sum of $20,000.For a proper negotiation, the check:

Accepted Answer

A) ​needs to be indorsed only by Gloria Schell, since her name appears first. 
B) needs to be indorsed by either payee, since the indorsement of only one of the payees is necessary to negotiate the check. 
C) ​needs to be indorsed by both payees. 
D) ​needs to be indorsed by the maker. 
A) ​needs to be indorsed only by Gloria Schell, since her name appears first. 
B) needs to be indorsed by either payee, since the indorsement of only one of the payees is necessary to negotiate the check. 
C) ​needs to be indorsed by both payees. 
D) ​needs to be indorsed by the maker.

Question 20

A forged or unauthorized indorsement is by definition:

Accepted Answer

A) ​an indorsement of the person by whom it appears to have been made. 
B) no indorsement of the person by whom it appears to have been made. 
C) ​binding on the party who refuses to ratify the instrument. 
D) ​incapable of being ratified. 
A) ​an indorsement of the person by whom it appears to have been made. 
B) no indorsement of the person by whom it appears to have been made. 
C) ​binding on the party who refuses to ratify the instrument. 
D) ​incapable of being ratified.

Exam 28: Transfers of Negotiable Instruments and Warranties of Parties

If a lost negotiable instrument is in bearer form at the time of the loss, the finder is entitled to enforce payment.

Negotiation of bearer paper requires:​

In the case of a check, when the impostor rule applies:

When a special indorsement is made, the instrument continues to be order paper and may be negotiated only by an indorsement and delivery.

A blank indorsement indicates the person to whom the instrument is to be paid-that is, the transferee.

A holder is also known as an assignee of the paper

A restrictive indorsement specifies the purpose of the indorsement or the use to be made of the paper.

The warranties made by an unqualified indorser guarantee that payment of the instrument will be made.

A transferor may be able to set aside a negotiation obtained by fraud or duress unless:

Order paper is negotiated by the indorsement of the holder only.

Under the UCC, a negotiation is not effective when it is made by a minor or any other person lacking capacity.

A qualified indorsement qualifies the effect of a blank or special indorsement by disclaiming certain liabilities of the indorser to a maker or drawee.

An unqualified indorser who receives consideration for the indorsement impliedly warrants all of the following except:​

Indorsements may be classified in terms of whether the indorser has added any words to the indorsement and what those words are.

The transferring of an instrument in such a way as to make the transferee the holder of the paper is termed:

An indorsement "Pay to Donald Hames, Cathy Dukes" is not a valid indorsement because it does not contain the words "order" or "bearer."

A blank indorsement turns a(n) __________instrument into a(n) __________ instrument.​

A __________ indorsement consists of the signature of the indorser and words specifying the person to whom the indorser makes the instrument payable.​

Industries Inc., drew a check payable to Gloria Schell and Pippen Tallit in the sum of $20,000.For a proper negotiation, the check:

A forged or unauthorized indorsement is by definition:

The Nature and Sources of Law

The Court System and Dispute Resolution

Business Ethics, Social Forces, and the Law

The Constitution As the Foundation of the Legal Environment

Government Regulation of Competition and Prices

Administrative Agencies

Crimes

Torts

Intellectual Property Rights and the Internet

The Legal Environment of International Trade

Nature and Classes of Contracts: Contracting on the Internet

Formation of Contracts: Offer and Acceptance

Capacity and Genuine Assent

Consideration

Legality and Public Policy

Writing, Electronic Forms, and Interpretation of Contracts

Third Persons and Contracts

Discharge of Contracts

Breach of Contract and Remedies

Personal Property and Bailments

Legal Aspects of Supply Chain Management

Nature and Form of Sales

Title and Risk of Loss

Product Liability: Warranties and Torts

Obligations and Performance

Remedies for Breach of Sales Contracts

Kinds of Negotiable Instruments and Negotiability

Liability of the Parties Under Negotiable Instruments

Checks and Funds Transfers

Nature of the Debtor-Creditor Relationship

Consumer Protection

Secured Transactions in Personal Property

Bankruptcy

Insurance

Agency

Third Persons in Agency

Regulation of Employment

Equal Employment Opportunity Law

Filters

Negotiation of bearer paper requires:

An unqualified indorser who receives consideration for the indorsement impliedly warrants all of the following except:

A blank indorsement turns a(n) instrument into a(n) instrument.

A __________ indorsement consists of the signature of the indorser and words specifying the person to whom the indorser makes the instrument payable.