Question 1

A promissory note cannot be scanned into an electronic note and have the electronic version qualify as a negotiable instrument under:

Accepted Answer

A) the Uniform Electronic Transactions Act. 
B) the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act. 
C) the Uniform Commercial Code. 
D) the Uniform Commercial Code and the Electronic Signatures in Global and National Commerce Act. 
A) the Uniform Electronic Transactions Act. 
B) the Uniform Electronic Transactions Act and the Electronic Signatures in Global and National Commerce Act. 
C) the Uniform Commercial Code. 
D) the Uniform Commercial Code and the Electronic Signatures in Global and National Commerce Act.

Question 2

Which of the following was the court's holding in the case in the text Music Acceptance Corp.v.Lofing?

Accepted Answer

A) The FTC rule was inapplicable because the transaction did not exceed $25,000. 
B) The plaintiff was in the same position whether the court applied the FTC rule or the language of the contract. 
C) The FTC rule was inapplicable because the plaintiff did not use credit to make the purchase. 
D) The Music Acceptance Corp.was a holder in due course. 
A) The FTC rule was inapplicable because the transaction did not exceed $25,000. 
B) The plaintiff was in the same position whether the court applied the FTC rule or the language of the contract. 
C) The FTC rule was inapplicable because the plaintiff did not use credit to make the purchase. 
D) The Music Acceptance Corp.was a holder in due course.

Question 3

Which of the following is not a requirement to be a holder in due course?

Accepted Answer

A) The holder must take the instrument for value. 
B) The holder must take the instrument in good faith. 
C) The holder must ensure through all reasonable means that the instrument has not been altered. 
D) The holder must take the instrument without notice of any claim of a property or possessory interest in it. 
A) The holder must take the instrument for value. 
B) The holder must take the instrument in good faith. 
C) The holder must ensure through all reasonable means that the instrument has not been altered. 
D) The holder must take the instrument without notice of any claim of a property or possessory interest in it.

Question 4

A person who makes an executory promise in return for a negotiable instrument has given value for it.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is NOT a defense specified in Revised Article 3?

Accepted Answer

A) Claims for damages 
B) Real defenses 
C) Claims to an instrument 
D) Claims in recoupment 
A) Claims for damages 
B) Real defenses 
C) Claims to an instrument 
D) Claims in recoupment

Question 6

Which of the following was the court's holding in the case in the text E & G Food Corp.v.Cumberland Farms?

Accepted Answer

A) The defense of forgery could be asserted against a holder in due course. 
B) The defense of forgery could not be asserted against a holder in due course. 
C) The defense of forgery could not be asserted against a holder. 
D) The defense of forgery could be asserted against a holder. 
A) The defense of forgery could be asserted against a holder in due course. 
B) The defense of forgery could not be asserted against a holder in due course. 
C) The defense of forgery could not be asserted against a holder. 
D) The defense of forgery could be asserted against a holder.

Question 7

In the case in the text New Randolph Halsted Currency Exchange v.Regent Title Insurance Company,what was the court's holding when it determined that New Randolph could qualify as a holder in due course?

Accepted Answer

A) It took the check without notice that any party had a claim in recoupment to it. 
B) It acted in good faith. 
C) It took the check for value. 
D) It acted in a commercially reasonable manner in seeking to determine the authenticity of the check. 
A) It took the check without notice that any party had a claim in recoupment to it. 
B) It acted in good faith. 
C) It took the check for value. 
D) It acted in a commercially reasonable manner in seeking to determine the authenticity of the check.

Question 8

An instrument that is payable "to cash" can be negotiated simply by giving it to the person to whom you wish to transfer it.

Accepted Answer

A) True 
 B)False

Question 9

Sonia,through fraudulent representations,induced Gracie to execute a negotiable note payable to Sonia.Sonia is a holder in due course.

Accepted Answer

A) True 
 B)False

Question 10

The new Article 3 recognizes and enforces indorsements that prohibit further negotiation of the instrument.

Accepted Answer

A) True 
 B)False

Question 11

What is the shelter rule in Article 3?

Accepted Answer

The transferee of an instrument-whether

Question 12

In case in the text Bank of America,N.A.v.Inda,why did the court hold that the bank was the holder of the note despite the fact that it transferred the beneficial interest to another entity and was only acting as the servicer of the loan?

Accepted Answer

A) The bank showed that it was a holder in due course. 
B) The bank showed that its successor had transferred the note back to it. 
C) The bank showed the chain of indorsements. 
D) The bank showed that the note was payable to it or in blank and that it remained in possession of the note. 
A) The bank showed that it was a holder in due course. 
B) The bank showed that its successor had transferred the note back to it. 
C) The bank showed the chain of indorsements. 
D) The bank showed that the note was payable to it or in blank and that it remained in possession of the note.

Question 13

Order paper that is indorsed in blank becomes bearer paper.

Accepted Answer

A) True 
 B)False

Question 14

What are the four categories of claims listed in Revised Article 3?

Accepted Answer

Revised Article 3 establishes four categ

Question 15

Jackie Collins is issued a check payable to the order of Jacky Collens.She takes the check to the bank.In order to cash the check the bank will likely require her to:

Accepted Answer

A) sign either Jackie Collins or Jacky Collens. 
B) sign only Jackie Collins. 
C) sign only Jacky Collens. 
D) sign both Jackie Collins and Jacky Collens. 
A) sign either Jackie Collins or Jacky Collens. 
B) sign only Jackie Collins. 
C) sign only Jacky Collens. 
D) sign both Jackie Collins and Jacky Collens.

Question 16

An instrument that is indorsed with a ________ indorsement remains "order paper."

Accepted Answer

A) special 
B) blank 
C) restrictive 
D) conditional 
A) special 
B) blank 
C) restrictive 
D) conditional

Question 17

Which of the following indorsements is a special indorsement?

Accepted Answer

A) "For collection only" 
B) "Mel Gibbs" 
C) "Pay to Jack Black in Trust for Mel Gibbs" 
D) "Pay to the Order of Jack Black,Mel Gibbs" 
A) "For collection only" 
B) "Mel Gibbs" 
C) "Pay to Jack Black in Trust for Mel Gibbs" 
D) "Pay to the Order of Jack Black,Mel Gibbs"

Question 18

Rachel's father gave her a check drawn on his checking account marked "payable to the order of Rachel Stern." This instrument is order paper,because:

Accepted Answer

A) the instrument uses the word "order." 
B) the instrument names a specific payee. 
C) the instrument was properly negotiated to Rachel. 
D) the instrument was an order to pay cash. 
A) the instrument uses the word "order." 
B) the instrument names a specific payee. 
C) the instrument was properly negotiated to Rachel. 
D) the instrument was an order to pay cash.

Question 19

In the case in the text General Credit Corp.v.New York Linen Co. ,which of the following was the result?

Accepted Answer

A) A holder in due course of a check was not subject to the personal defense of failure of consideration that the drawer of the check had against the payee of the check. 
B) A holder in due course of a check was not subject to the personal defense of duress that the drawer of the check had against the payee of the check. 
C) A holder in due course of a check was not subject to the personal defense of modification of the obligation by a separate agreement that the drawer of the check had against the payee of the check. 
D) A holder in due course of a check was not subject to the personal defense of breach of contract that the drawer of the check had against the payee of the check. 
A) A holder in due course of a check was not subject to the personal defense of failure of consideration that the drawer of the check had against the payee of the check. 
B) A holder in due course of a check was not subject to the personal defense of duress that the drawer of the check had against the payee of the check. 
C) A holder in due course of a check was not subject to the personal defense of modification of the obligation by a separate agreement that the drawer of the check had against the payee of the check. 
D) A holder in due course of a check was not subject to the personal defense of breach of contract that the drawer of the check had against the payee of the check.

Question 20

On June 1,Mike writes a check payable to Pete.Without ever being paid,the check is eventually negotiated to Hal,who receives it on September 15 with notice of the date on its face.Hal is not a holder in due course of the check.

Accepted Answer

A) True 
 B)False

Exam 32: Negotiation and Holder in Due Course

A promissory note cannot be scanned into an electronic note and have the electronic version qualify as a negotiable instrument under:

Which of the following was the court's holding in the case in the text Music Acceptance Corp.v.Lofing?

Which of the following is not a requirement to be a holder in due course?

A person who makes an executory promise in return for a negotiable instrument has given value for it.

Which of the following is NOT a defense specified in Revised Article 3?

Which of the following was the court's holding in the case in the text E & G Food Corp.v.Cumberland Farms?

In the case in the text New Randolph Halsted Currency Exchange v.Regent Title Insurance Company,what was the court's holding when it determined that New Randolph could qualify as a holder in due course?

An instrument that is payable "to cash" can be negotiated simply by giving it to the person to whom you wish to transfer it.

Sonia,through fraudulent representations,induced Gracie to execute a negotiable note payable to Sonia.Sonia is a holder in due course.

The new Article 3 recognizes and enforces indorsements that prohibit further negotiation of the instrument.

What is the shelter rule in Article 3?

In case in the text Bank of America,N.A.v.Inda,why did the court hold that the bank was the holder of the note despite the fact that it transferred the beneficial interest to another entity and was only acting as the servicer of the loan?

Order paper that is indorsed in blank becomes bearer paper.

What are the four categories of claims listed in Revised Article 3?

Jackie Collins is issued a check payable to the order of Jacky Collens.She takes the check to the bank.In order to cash the check the bank will likely require her to:

An instrument that is indorsed with a ________ indorsement remains "order paper."

Which of the following indorsements is a special indorsement?

Rachel's father gave her a check drawn on his checking account marked "payable to the order of Rachel Stern." This instrument is order paper,because:

In the case in the text General Credit Corp.v.New York Linen Co. ,which of the following was the result?

On June 1,Mike writes a check payable to Pete.Without ever being paid,the check is eventually negotiated to Hal,who receives it on September 15 with notice of the date on its face.Hal is not a holder in due course of the check.

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

The Agreement: Acceptance

Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

Administrative Law

The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinsonpatman Act, and Antitrust Exemptions and Immunities

Employment Law

Environmental Regulation

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