Question 1

In which of the following situations is an instrument termed as overdue?

Accepted Answer

A) Where a check was made out 60 days ago. 
B) Where there is a default in payment of interest on a note,but not in the payment of the principal. 
C) Where the principal on a note is due in installments and an installment has not been paid. 
D) Where a note dated January 1 is payable "30 days after date" and is paid on January 31. 
A) Where a check was made out 60 days ago. 
B) Where there is a default in payment of interest on a note,but not in the payment of the principal. 
C) Where the principal on a note is due in installments and an installment has not been paid. 
D) Where a note dated January 1 is payable "30 days after date" and is paid on January 31.

Question 2

In the case in the text Lehigh Presbytery v.Merchants Bancorp,why did the court find in favor of Lehigh Presbytery?

Accepted Answer

A) Because the bank's employee was part of Hunsberger's scheme to steal money from the church. 
B) Because the evidence demonstrated the bank knew the checks contained a restrictive indorsement and disregarded it anyway. 
C) Because the check contained a restrictive indorsement and the bank had an unwaivable obligation to follow it. 
D) Because the bank employees removed the restrictive indorsements from the checks. 
A) Because the bank's employee was part of Hunsberger's scheme to steal money from the church. 
B) Because the evidence demonstrated the bank knew the checks contained a restrictive indorsement and disregarded it anyway. 
C) Because the check contained a restrictive indorsement and the bank had an unwaivable obligation to follow it. 
D) Because the bank employees removed the restrictive indorsements from the checks.

Question 3

Under Revised Article 3,a person is a(n)________ if she is in possession of an instrument that is payable to bearer or made payable to an identified person and she is that identified person.

Accepted Answer

A) payor 
B) issuer 
C) bailor 
D) holder 
A) payor 
B) issuer 
C) bailor 
D) holder

Question 4

Which of the following is an example of restrictive endorsements recognized under Article 3?

Accepted Answer

A) "Pay to Bruce Zucker in Trust for Jay Zucker." 
B) "Pay to Bruce Zucker Only." 
C) "Pay to Jay Zucker on the condition that he completes construction on my house by November 1,2012." 
D) "Pay to the order of my account." 
A) "Pay to Bruce Zucker in Trust for Jay Zucker." 
B) "Pay to Bruce Zucker Only." 
C) "Pay to Jay Zucker on the condition that he completes construction on my house by November 1,2012." 
D) "Pay to the order of my account."

Question 5

A holder in due course of a negotiable instrument always has the same rights as the individual that transferred the negotiable instrument to the holder.

Accepted Answer

A) True 
 B)False

Question 6

UCC section 2-302(a)(1)states that in order for an individual to become a holder in due course the instrument must on its face:

Accepted Answer

A) appear not to be forged. 
B) be written in a language other than English. 
C) have the signature of a foreign corporation. 
D) be on any other color paper than white. 
A) appear not to be forged. 
B) be written in a language other than English. 
C) have the signature of a foreign corporation. 
D) be on any other color paper than white.

Question 7

John received a check from his employer marked "pay to the order of John Jones." John used this check to pay for groceries from ABC Foods.He wrote on the back of the check: "pay to ABC Foods,for groceries." Was this check properly negotiated?

Accepted Answer

A) No,because the statement that the check was for payment to ABC Foods defeats this negotiation. 
B) No,because John did not indorse the check. 
C) Yes,because John transferred possession of the check and ABC Foods acted in good faith. 
D) Yes,because a holder's signature is not always needed in order to negotiate a check. 
A) No,because the statement that the check was for payment to ABC Foods defeats this negotiation. 
B) No,because John did not indorse the check. 
C) Yes,because John transferred possession of the check and ABC Foods acted in good faith. 
D) Yes,because a holder's signature is not always needed in order to negotiate a check.

Question 8

In some circumstances, Revised Article 3 allows a person to become a holder by negotiation even though the transfer of possession is involuntary.

Accepted Answer

A) True 
 B)False

Question 9

Generally,real defenses arise out of the transaction in which the negotiable instrument was issued and are based on negotiable instruments law or contract law.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following indorsements is a restrictive indorsement?

Accepted Answer

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

Exam 32: Negotiation and Holder in Due Course

In which of the following situations is an instrument termed as overdue?

In the case in the text Lehigh Presbytery v.Merchants Bancorp,why did the court find in favor of Lehigh Presbytery?

Under Revised Article 3,a person is a(n)________ if she is in possession of an instrument that is payable to bearer or made payable to an identified person and she is that identified person.

Which of the following is an example of restrictive endorsements recognized under Article 3?

A holder in due course of a negotiable instrument always has the same rights as the individual that transferred the negotiable instrument to the holder.

UCC section 2-302(a)(1)states that in order for an individual to become a holder in due course the instrument must on its face:

John received a check from his employer marked "pay to the order of John Jones." John used this check to pay for groceries from ABC Foods.He wrote on the back of the check: "pay to ABC Foods,for groceries." Was this check properly negotiated?

In some circumstances, Revised Article 3 allows a person to become a holder by negotiation even though the transfer of possession is involuntary.

Generally,real defenses arise out of the transaction in which the negotiable instrument was issued and are based on negotiable instruments law or contract law.

Which of the following indorsements is a restrictive indorsement?

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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