Question 1

Checks,when accepted,are said to be certified.

Accepted Answer

A) True 
 B)False

Question 2

Warranty liability applies to persons who:

Accepted Answer

A) transfer an instrument. 
B) obtain payment or acceptance of an instrument. 
C) have signed the instrument, but not on those who have not signed. 
D) All of the above. 
E) Both (a) and (b) are correct. 
A) transfer an instrument. 
B) obtain payment or acceptance of an instrument. 
C) have signed the instrument, but not on those who have not signed. 
D) All of the above. 
E) Both (a) and (b) are correct.

Question 3

An accommodation party is a direct beneficiary of the value received from lending her credit on an instrument.

Accepted Answer

A) True 
 B)False

Question 4

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 5

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 bank pays an instrument containing only one of two required indorsements. 
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 bank pays an instrument containing only one of two required indorsements.

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

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

Accepted Answer

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

Question 8

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 9

Presentment is excused where the acceptor is undergoing bankruptcy.

Accepted Answer

A) True 
 B)False

Question 10

First Bank returns a check because it lacks a necessary indorsement.This action constitutes a dishonor of the check.

Accepted Answer

A) True 
 B)False

Question 11

Bob took a check written by Jack to Jack's bank to be certified.The bank stamped "Certified" on it and gave it back to Bob.What consequence?

Accepted Answer

A) Bob can only demand the money from Jack. 
B) Bob can only demand the money from the bank. 
C) The bank would have to pay if Jack doesn't. 
D) Bob would have to pay if the bank doesn't. 
A) Bob can only demand the money from Jack. 
B) Bob can only demand the money from the bank. 
C) The bank would have to pay if Jack doesn't. 
D) Bob would have to pay if the bank doesn't.

Question 12

An unauthorized signature may bind a principal who allowed the signature to be made through his own negligence.

Accepted Answer

A) True 
 B)False

Question 13

Brad wrote a check to Clara for $1,000 on his account at First Bank.He then took it to his bank for certification.The bank wrote "certified" on the face of the check.Brad then gave the check to Clara.When Clara took the check to First Bank,they refused to pay,claiming that there was not enough money in Brad's account to cover the check.Which of the following is correct?

Accepted Answer

A) First Bank is primarily liable on the check, because it has already accepted it. 
B) Clara has no recourse under the circumstances. 
C) Brad is secondarily liable on the check, because he is the drawer. 
D) Two of the above, (a) and (c), are correct. 
A) First Bank is primarily liable on the check, because it has already accepted it. 
B) Clara has no recourse under the circumstances. 
C) Brad is secondarily liable on the check, because he is the drawer. 
D) Two of the above, (a) and (c), are correct.

Question 14

A drawee bank is primarily liable after it accepts the check.

Accepted Answer

A) True 
 B)False

Question 15

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 16

In Cohen v.Disner the court found that Disner was not liable on the check because he had no enforceable obligation to pay,the check was drawn by him in a representative capacity,and the holder had notice that Disner's signature was in the capacity of an agent.

Accepted Answer

A) True 
 B)False

Question 17

An accommodation party will always be primarily liable on an instrument.

Accepted Answer

A) True 
 B)False

Question 18

Bob,a guest in Jim's house,opens Jim's desk and writes a check to himself on Jim's checking account,forging Jim's signature.He indorses the check "Bob Saunders" 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 19

The time for dishonor of a check can vary greatly depending on the number of banks involved in the collection process.

Accepted Answer

A) True 
 B)False

Question 20

Thomas is the treasurer of Oklaw,Inc.He has authority to sign on behalf of the company.One day,he signs a note as follows: "Thomas Maurtin,as treasurer." The company's name does not appear on the note.Is the company liable on the note? Is Thomas liable on the note?

Accepted Answer

When an authorized agent indicates that

Exam 26: Liability of Parties

Checks,when accepted,are said to be certified.

Warranty liability applies to persons who:

An accommodation party is a direct beneficiary of the value received from lending her credit on an instrument.

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.

In which of the following situations has conversion NOT occurred?

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

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

Who is primarily liable on a note?

Presentment is excused where the acceptor is undergoing bankruptcy.

First Bank returns a check because it lacks a necessary indorsement.This action constitutes a dishonor of the check.

Bob took a check written by Jack to Jack's bank to be certified.The bank stamped "Certified" on it and gave it back to Bob.What consequence?

An unauthorized signature may bind a principal who allowed the signature to be made through his own negligence.

A drawee bank is primarily liable after it accepts the check.

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

In Cohen v.Disner the court found that Disner was not liable on the check because he had no enforceable obligation to pay,the check was drawn by him in a representative capacity,and the holder had notice that Disner's signature was in the capacity of an agent.

An accommodation party will always be primarily liable on an instrument.

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

The time for dishonor of a check can vary greatly depending on the number of banks involved in the collection process.

Thomas is the treasurer of Oklaw,Inc.He has authority to sign on behalf of the company.One day,he signs a note as follows: "Thomas Maurtin,as treasurer." The company's name does not appear on the note.Is the company liable on the note? Is Thomas liable on the note?

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 and 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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