Question 1

A promise or order is unconditional unless it states that:

Accepted Answer

A) there is an express condition to payment. 
B) the promise or order is subject to or governed by another writing. 
C) rights or obligations concerning the order or promise are stated in another writing. 
D) All of the above. 
A) there is an express condition to payment. 
B) the promise or order is subject to or governed by another writing. 
C) rights or obligations concerning the order or promise are stated in another writing. 
D) All of the above. D

Question 2

Which of the following is not a negotiable instrument?

Accepted Answer

A) A check. 
B) A draft. 
C) A certificate of deposit. 
D) A stock certificate. 
A) A check. 
B) A draft. 
C) A certificate of deposit. 
D) A stock certificate. D

Question 3

Jake signed and delivered a negotiable promissory note payable to Nancy.Nancy negotiated the note to Fred.Fred now has the same legal status as an assignee of a contract.

Accepted Answer

A) True 
 B)False  False

Question 4

The court in Cooperative Centrale Raiffeisen-Boerenleenbank B.A.v.Bailey found:

Accepted Answer

A) whether an instrument is negotiable is a question of fact. 
B) whether an instrument is negotiable is to be determined without reference to the intent of the parties. 
C) the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability. 
D) the question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent. 
A) whether an instrument is negotiable is a question of fact. 
B) whether an instrument is negotiable is to be determined without reference to the intent of the parties. 
C) the wording of the note was unclear and therefore it did not fall within the UCC Article 3 requirements of negotiability. 
D) the question of whether the promissory note was negotiable had to be determined by questioning the parties to the transaction as to their intent.

Question 5

Identify which of the following meet the Article 3 negotiability requirement of being payable at a definite time: (a)A note payable "on or before June 14,2014." (b)A dated instrument payable "30 days after date." (c)An undated instrument payable "30 days after date." (d)An instrument payable "when Baxter is promoted to plant manager." (e)A note payable on December 31,subject to acceleration by the holder." (f)A note granting the holder the option to extend maturity of the instrument for an indefinite period.

Accepted Answer

Illustrations (a), (b), (e),and (f)are i

Question 6

The vital importance of negotiable instruments and electronic transfers as methods of payment cannot be overstated.

Accepted Answer

A) True 
 B)False

Question 7

A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment.Should the drawer pay Sally?

Accepted Answer

A) No, unless Joe Jones's name is crossed off. 
B) No, unless "bearer" is handwritten. 
C) Yes, since the word "or" is contained in the instrument, either Joe Jones or the bearer of the draft may obtain payment. 
D) No, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones. 
A) No, unless Joe Jones's name is crossed off. 
B) No, unless "bearer" is handwritten. 
C) Yes, since the word "or" is contained in the instrument, either Joe Jones or the bearer of the draft may obtain payment. 
D) No, the terminology is ambiguous and therefore the draft must be paid only to the order of Joe Jones.

Question 8

Which of the following would be an unconditional promise or order to pay?

Accepted Answer

A) "I hereby acknowledge my debt to John Jones." 
B) "I hereby promise to pay $2,000 to John Jones provided the lawn tractor sold meets the contractual specifications." 
C) "Pay to the order of bearer ten dollars." 
D) "IOU fifty dollars." 
A) "I hereby acknowledge my debt to John Jones." 
B) "I hereby promise to pay $2,000 to John Jones provided the lawn tractor sold meets the contractual specifications." 
C) "Pay to the order of bearer ten dollars." 
D) "IOU fifty dollars."

Question 9

Only a bank may serve as the maker of a certificate of a deposit.

Accepted Answer

A) True 
 B)False

Question 10

Bill's car broke down on a dark,rainy night.Along came Andy in his service station's four-wheel drive truck with tools and supplies in the back.Bill didn't have any credit cards and only $3.25 cash,so Andy told him to write a check or an IOU.Neither Andy nor Bill had any paper,so Bill wrote on the cover of Andy's lunchbox: "If my car is fixed right by Andy Walcott,I will pay him $150.(Signed)Bill Boyd." Andy indorses the note and takes it to a commercial factor for negotiation.The factor refuses,saying it is non-negotiable because it:

Accepted Answer

A) is written on a lunchbox. 
B) is conditional on satisfactory repair of the car. 
C) mentions the existence of a contract to repair the car. 
D) All of the above. 
E) None of the above. 
A) is written on a lunchbox. 
B) is conditional on satisfactory repair of the car. 
C) mentions the existence of a contract to repair the car. 
D) All of the above. 
E) None of the above.

Question 11

A check is a draft payable on demand.

Accepted Answer

A) True 
 B)False

Question 12

An "I.O.U." is a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following notes would not be negotiable? A written,signed promise to pay:

Accepted Answer

A) $50,000 to the order of Crouch, and the maker of the note orally stated to Crouch that the money would only be paid if all contractual specifications were met. 
B) $500 and a rick of firewood on or before September 10. 
C) which includes a statement that, "This note is given in partial payment for a piano to be delivered in one week from date in accordance with a contract of this date between the maker and the payee." 
D) All of the above. 
A) $50,000 to the order of Crouch, and the maker of the note orally stated to Crouch that the money would only be paid if all contractual specifications were met. 
B) $500 and a rick of firewood on or before September 10. 
C) which includes a statement that, "This note is given in partial payment for a piano to be delivered in one week from date in accordance with a contract of this date between the maker and the payee." 
D) All of the above.

Question 14

A provision in a promissory note payable one year from its date that the maker may extend the maturity date six months impairs the note's negotiability.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would be a bearer instrument?

Accepted Answer

A) A check payable to "cash." 
B) A check that says "pay to the order of John Jones." 
C) A check that says "pay to the order of bearer." 
D) Two of the above, (a) and (c). 
A) A check payable to "cash." 
B) A check that says "pay to the order of John Jones." 
C) A check that says "pay to the order of bearer." 
D) Two of the above, (a) and (c).

Question 16

A certificate of deposit differs from a promissory note in that:

Accepted Answer

A) the maker is always a bank. 
B) there are three parties to the transaction. 
C) the payee of a CD must be paid on demand. 
D) Both (a) and (b). 
A) the maker is always a bank. 
B) there are three parties to the transaction. 
C) the payee of a CD must be paid on demand. 
D) Both (a) and (b).

Question 17

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.

Accepted Answer

A) True 
 B)False

Question 18

If Sam writes a check drawn on his account at First Bank to State University to pay his tuition:

Accepted Answer

A) Sam is the drawer. 
B) the university is the drawee. 
C) the bank is the payee. 
D) Sam is the maker. 
A) Sam is the drawer. 
B) the university is the drawee. 
C) the bank is the payee. 
D) Sam is the maker.

Question 19

Would an instrument containing the following language be negotiable? "Harold T.Stone,as President,hereby promises to pay $12,348 to the order of Joe Jones Furniture for office equipment for Redtyn Corporation,payable from its corporate assets.(Signed)Harold T.Stone as President,Redtyn Corporation."

Accepted Answer

A) No, because the promise refers to another contract. 
B) No, because its payment is limited to a particular fund. 
C) Yes, because Redtyn is a business entity. 
D) Yes, because it meets all the requirements of negotiability. 
A) No, because the promise refers to another contract. 
B) No, because its payment is limited to a particular fund. 
C) Yes, because Redtyn is a business entity. 
D) Yes, because it meets all the requirements of negotiability.

Question 20

All but which one of the following is required of a negotiable instrument?

Accepted Answer

A) It must be payable only out of a particular fund. 
B) It must contain an unconditional promise or order to pay a fixed amount in money. 
C) It must be payable on demand or at a definite future date. 
D) It must be in writing and signed by the maker or drawer. 
A) It must be payable only out of a particular fund. 
B) It must contain an unconditional promise or order to pay a fixed amount in money. 
C) It must be payable on demand or at a definite future date. 
D) It must be in writing and signed by the maker or drawer.

Exam 24: Form and Content

A promise or order is unconditional unless it states that:

Which of the following is not a negotiable instrument?

Jake signed and delivered a negotiable promissory note payable to Nancy.Nancy negotiated the note to Fred.Fred now has the same legal status as an assignee of a contract.

The court in Cooperative Centrale Raiffeisen-Boerenleenbank B.A.v.Bailey found:

The vital importance of negotiable instruments and electronic transfers as methods of payment cannot be overstated.

A draft is payable "to the order of Joe Jones or to bearer." Sally finds it and demands payment.Should the drawer pay Sally?

Which of the following would be an unconditional promise or order to pay?

Only a bank may serve as the maker of a certificate of a deposit.

A check is a draft payable on demand.

An "I.O.U." is a negotiable instrument.

Which of the following notes would not be negotiable? A written,signed promise to pay:

A provision in a promissory note payable one year from its date that the maker may extend the maturity date six months impairs the note's negotiability.

Which of the following would be a bearer instrument?

A certificate of deposit differs from a promissory note in that:

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.

If Sam writes a check drawn on his account at First Bank to State University to pay his tuition:

Would an instrument containing the following language be negotiable? "Harold T.Stone,as President,hereby promises to pay $12,348 to the order of Joe Jones Furniture for office equipment for Redtyn Corporation,payable from its corporate assets.(Signed)Harold T.Stone as President,Redtyn Corporation."

All but which one of the following is required of a negotiable instrument?

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

Transfer and Holder in Due Course

Liability of Parties

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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