Question 1

The indorser's liability is discharged if the check is not presented within:

Accepted Answer

A) 7 days after the date of endorsement. 
B) 14 days after the date of endorsement. 
C) 30 days after the date of endorsement. 
D) 48 hours after the endorsement. 
A) 7 days after the date of endorsement. 
B) 14 days after the date of endorsement. 
C) 30 days after the date of endorsement. 
D) 48 hours after the endorsement.

Question 2

A signature not "authorized" when it is put on an instrument initially cannot be ratified later by the person represented.

Accepted Answer

A) True 
 B)False

Question 3

The imposter rule regarding negotiable instruments:

Accepted Answer

A) was devised to put the responsibility for determining the true identity of the payee on the drawee of a check. 
B) makes the payee's signature valid even though it is a forgery. 
C) does not force the maker to find the wrongdoer. 
D) lays the responsibility of determining the identity of payee on latter holders of an instrument. 
A) was devised to put the responsibility for determining the true identity of the payee on the drawee of a check. 
B) makes the payee's signature valid even though it is a forgery. 
C) does not force the maker to find the wrongdoer. 
D) lays the responsibility of determining the identity of payee on latter holders of an instrument.

Question 4

No person is contractually liable on a negotiable instrument unless she or her authorized agent has signed it and the signature is binding on the represented person.

Accepted Answer

A) True 
 B)False

Question 5

A person who is secondarily liable is like a(n):

Accepted Answer

A) guarantor on a contract. 
B) assignor. 
C) assignee. 
D) drawer. 
A) guarantor on a contract. 
B) assignor. 
C) assignee. 
D) drawer.

Question 6

A non-indorsing transferor:

Accepted Answer

A) makes all five transferor's warranties only to the immediate transferor. 
B) makes all five transferor's warranties to all subsequent holders. 
C) makes only four transferor's warranties to the immediate transferor. 
D) makes all five transferor's warranties,with a change in the fourth warranty,to all subsequent holders. 
A) makes all five transferor's warranties only to the immediate transferor. 
B) makes all five transferor's warranties to all subsequent holders. 
C) makes only four transferor's warranties to the immediate transferor. 
D) makes all five transferor's warranties,with a change in the fourth warranty,to all subsequent holders.

Question 7

Conversion of an instrument:

Accepted Answer

A) is an authorized assumption and exercise of ownership over it. 
B) may occur if a person pays an instrument on a forged indorsement. 
C) differs from conversion of personal property with respect to the applicable laws. 
D) occurs only if it lacks indorsement necessary for negotiation. 
A) is an authorized assumption and exercise of ownership over it. 
B) may occur if a person pays an instrument on a forged indorsement. 
C) differs from conversion of personal property with respect to the applicable laws. 
D) occurs only if it lacks indorsement necessary for negotiation.

Question 8

Mila borrows $1,000 from Pedro to pay for school and gives Pedro a note for that amount.Pedro wants Mila's father to sign as an accommodation party.Mila's father signs below Mila's signature on the fall of the note.Who has liability to Pedro?

Accepted Answer

A) Mila has primary liability as a maker. 
B) Mila's father has primary liability as an accommodation maker. 
C) Mila and her father have the same contractual liability. 
D) Mila has primary liability and her father has secondary liability. 
A) Mila has primary liability as a maker. 
B) Mila's father has primary liability as an accommodation maker. 
C) Mila and her father have the same contractual liability. 
D) Mila has primary liability and her father has secondary liability.

Question 9

James draws a check on his account at First National Bank payable to the order of Terry.If First National does not pay the check when Terry presents it for payment,then:

Accepted Answer

A) both James and the bank are liable to Terry. 
B) James is liable to Terry on the basis of drawer's obligation. 
C) James transfers his duties as a drawer to the drawee bank and the bank is liable. 
D) neither James nor the bank is liable to Terry. 
A) both James and the bank are liable to Terry. 
B) James is liable to Terry on the basis of drawer's obligation. 
C) James transfers his duties as a drawer to the drawee bank and the bank is liable. 
D) neither James nor the bank is liable to Terry.

Question 10

Alice drew a check on her account at the Third National Bank payable to the order of Aaron.When Aaron presented the check for payment,Third National refused to honor the check.Under these circumstances:

Accepted Answer

A) the bank may be liable to Alice for wrongfully refusing payment if Alice has sufficient funds in her checking account to cover it. 
B) the bank may be liable to Aaron for wrongfully refusing payment if Alice has sufficient funds in her checking account to cover it. 
C) the bank has breached its transferor's warranties. 
D) the bank will be liable to both Aaron and Alice. 
A) the bank may be liable to Alice for wrongfully refusing payment if Alice has sufficient funds in her checking account to cover it. 
B) the bank may be liable to Aaron for wrongfully refusing payment if Alice has sufficient funds in her checking account to cover it. 
C) the bank has breached its transferor's warranties. 
D) the bank will be liable to both Aaron and Alice.

Question 11

The obligation of the maker is owed:

Accepted Answer

A) to a person entitled to enforce the instrument. 
B) only to holders of the instrument. 
C) even to indorsers who have not paid the instrument pursuant to their indorser's liability. 
D) only to a nonholder in possession of the instrument. 
A) to a person entitled to enforce the instrument. 
B) only to holders of the instrument. 
C) even to indorsers who have not paid the instrument pursuant to their indorser's liability. 
D) only to a nonholder in possession of the instrument.

Question 12

Liability on a negotiable instrument:

Accepted Answer

A) can arise only by transfer of an instrument. 
B) cannot arise from non-presentment. 
C) can arise from negligence relating to the issuance. 
D) cannot arise from improper payment. 
A) can arise only by transfer of an instrument. 
B) cannot arise from non-presentment. 
C) can arise from negligence relating to the issuance. 
D) cannot arise from improper payment.

Question 13

Explain the five transferor's warranties.

Accepted Answer

A person who transfers a negotiable inst

Question 14

Which of the following is true of the obligations of an acceptor?

Accepted Answer

A) If the certification or acceptance does not state an amount then the acceptor is free of all obligations. 
B) If the certification of a check or other acceptance of a draft states the amount accepted,the obligation of the acceptor is the amount of the instrument at the time a holder in due course takes it. 
C) If the certification of a check or other acceptance of a draft states the amount certified or accepted,the obligation of the acceptor is that amount. 
D) If the certification or acceptance does not state an amount,or if the amount of the instrument is subsequently raised,then the obligation of the acceptor is the raised amount. 
A) If the certification or acceptance does not state an amount then the acceptor is free of all obligations. 
B) If the certification of a check or other acceptance of a draft states the amount accepted,the obligation of the acceptor is the amount of the instrument at the time a holder in due course takes it. 
C) If the certification of a check or other acceptance of a draft states the amount certified or accepted,the obligation of the acceptor is that amount. 
D) If the certification or acceptance does not state an amount,or if the amount of the instrument is subsequently raised,then the obligation of the acceptor is the raised amount.

Question 15

When an incomplete instrument is completed after it has left the drawer's hands,a holder in due course can:

Accepted Answer

A) enforce it as completed. 
B) enforce only the intent of the drawer. 
C) do nothing-he/she loses any rights to the instrument. 
D) not enforce it as completed. 
A) enforce it as completed. 
B) enforce only the intent of the drawer. 
C) do nothing-he/she loses any rights to the instrument. 
D) not enforce it as completed.

Question 16

A holder in due course may discharge the liability of the parties to the instrument by:

Accepted Answer

A) publishing notice. 
B) canceling it. 
C) repudiating it. 
D) paying for it even if it is a stolen one. 
A) publishing notice. 
B) canceling it. 
C) repudiating it. 
D) paying for it even if it is a stolen one.

Question 17

Define the situations that lead to dishonoring of a note by the maker.

Accepted Answer

Dishonor of a note occurs if the maker d

Question 18

If a holder has indorsed a negotiable instrument restrictively indorsed,the person who pays must comply with the restrictive indorsement to be discharged.

Accepted Answer

A) True 
 B)False

Question 19

Mack is Bertha's agent and is authorized to sign checks for her.Mack signs one of Bertha's checks with only his own name.Who is liable on the check?

Accepted Answer

A) Bertha 
B) Mack 
C) Both Mack and Bertha 
D) Neither Mack nor Bertha 
A) Bertha 
B) Mack 
C) Both Mack and Bertha 
D) Neither Mack nor Bertha

Question 20

Notice of dishonor must be made only by written means.

Accepted Answer

A) True 
 B)False

Exam 40: Liability of Parties

The indorser's liability is discharged if the check is not presented within:

A signature not "authorized" when it is put on an instrument initially cannot be ratified later by the person represented.

The imposter rule regarding negotiable instruments:

No person is contractually liable on a negotiable instrument unless she or her authorized agent has signed it and the signature is binding on the represented person.

A person who is secondarily liable is like a(n):

A non-indorsing transferor:

Conversion of an instrument:

Mila borrows $1,000 from Pedro to pay for school and gives Pedro a note for that amount.Pedro wants Mila's father to sign as an accommodation party.Mila's father signs below Mila's signature on the fall of the note.Who has liability to Pedro?

James draws a check on his account at First National Bank payable to the order of Terry.If First National does not pay the check when Terry presents it for payment,then:

Alice drew a check on her account at the Third National Bank payable to the order of Aaron.When Aaron presented the check for payment,Third National refused to honor the check.Under these circumstances:

The obligation of the maker is owed:

Liability on a negotiable instrument:

Explain the five transferor's warranties.

Which of the following is true of the obligations of an acceptor?

When an incomplete instrument is completed after it has left the drawer's hands,a holder in due course can:

A holder in due course may discharge the liability of the parties to the instrument by:

Define the situations that lead to dishonoring of a note by the maker.

If a holder has indorsed a negotiable instrument restrictively indorsed,the person who pays must comply with the restrictive indorsement to be discharged.

Mack is Bertha's agent and is authorized to sign checks for her.Mack signs one of Bertha's checks with only his own name.Who is liable on the check?

Notice of dishonor must be made only by written means.

Law, Legal Reasoning, and the Legal Profession

Dispute Settlement

Business Ethics and Corporate Social Responsibility

Business and the Constitution

Crimes

Intentional Torts

Negligence and Strict Liability

Licensing and Intellectual Property

The Nature and Origins of Contracts

Creating a Contract: Offers

Creating a Contract: Acceptances

Consideration

Capacity to Contract

Voluntary Consent

Illegality

The Form and Meaning of Contracts

Third Parties Contract Rights

Performance and Remedies

Formation and Terms of Sales Contracts

Warranties and Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

The Agency Relationship-Creation, Duties, and Termination

Liability of Principals and Agents to Third Parties

Employment Laws

Which Form of Business Organization

Partnerships

Formation and Termination of Corporations

Management of the Corporate Business

Financing the Corporation and the Role of the Shareholders

Securities Regulation

Legal Liability of Accountants

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance

Negotiable Instruments

Negotiation and Holder in Due Course

Checks and Electronic Fund Transfers

Introduction to Security

Security Interests in Personal Property

Bankruptcy

The Antitrust Laws

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