Question 1

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following did the court determine on appeal in Wawel Savings Bank v.Jersey Tractor Trailer Training Inc.,the case in the text in which a lender who perfected an interest in a debtor's collateral claimed to have priority in bankruptcy over an entity who later entered into an agreement whereby it purchased rights to the debtor's accounts receivables?

Accepted Answer

A)  Under the "first in time" rule, the court ruled in favor of the lender who perfected the interest in the debtor's collateral. 
B)  Under the "first to file" rule, the court ruled in favor of the lender who perfected the interest in the debtor's collateral. 
C)  The court ruled in favor of the purchaser of receivables on the basis that the agreement the lender had with the debtor did not expressly prohibit the sale of receivables. 
D)  The court ruled in favor of the purchaser of receivables on the basis that an immediate transaction for value was involved. 
E)  The court remanded the case for a determination as to whether the purchaser of receivables was a holder in due course or a purchaser of instruments in which case it would prevail. 
A)  Under the "first in time" rule, the court ruled in favor of the lender who perfected the interest in the debtor's collateral. 
B)  Under the "first to file" rule, the court ruled in favor of the lender who perfected the interest in the debtor's collateral. 
C)  The court ruled in favor of the purchaser of receivables on the basis that the agreement the lender had with the debtor did not expressly prohibit the sale of receivables. 
D)  The court ruled in favor of the purchaser of receivables on the basis that an immediate transaction for value was involved. 
E)  The court remanded the case for a determination as to whether the purchaser of receivables was a holder in due course or a purchaser of instruments in which case it would prevail.

Question 3

Which of the following is the payee's or last endorsee's signature and nothing else?

Accepted Answer

A)  A special endorsement. 
B)  An allonge. 
C)  A blank endorsement. 
D)  A qualified endorsement. 
E)  A restricted endorsement. 
A)  A special endorsement. 
B)  An allonge. 
C)  A blank endorsement. 
D)  A qualified endorsement. 
E)  A restricted endorsement.

Question 4

Which of the following is true regarding Sam's rights in relation to the check?

Accepted Answer

A)  As a holder, Sam may demand payment from either Susie, Annie, or Mary. 
B)  As a holder in due course, Sam may demand payment from either Susie, Annie, or Mary. 
C)  As a holder, Sam may demand payment from either Susie or Annie, but not Mary. 
D)  As a holder in due course, Sam may demand payment from either Susie or Annie, but not Mary. 
E)  Sam may not demand payment from either Susie, Annie, or Mary. 
A)  As a holder, Sam may demand payment from either Susie, Annie, or Mary. 
B)  As a holder in due course, Sam may demand payment from either Susie, Annie, or Mary. 
C)  As a holder, Sam may demand payment from either Susie or Annie, but not Mary. 
D)  As a holder in due course, Sam may demand payment from either Susie or Annie, but not Mary. 
E)  Sam may not demand payment from either Susie, Annie, or Mary.

Question 5

In the event of a misspelled name,how may the holder endorse the document?

Accepted Answer

A)  Only with the misspelled name. 
B)  Only with the holder's actual name or the misspelled name. 
C)  Only with the misspelled name followed by the actual name. 
D)  With the holder's actual name, with the misspelled name, or with the misspelled name followed by the actual name. 
E)  Endorsement is impossible in such a situation. 
A)  Only with the misspelled name. 
B)  Only with the holder's actual name or the misspelled name. 
C)  Only with the misspelled name followed by the actual name. 
D)  With the holder's actual name, with the misspelled name, or with the misspelled name followed by the actual name. 
E)  Endorsement is impossible in such a situation.

Question 6

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Accepted Answer

A)  An acknowledged instrument. 
B)  A contract instrument. 
C)  A negotiable instrument. 
D)  A holder instrument. 
E)  A delivered instrument. 
A)  An acknowledged instrument. 
B)  A contract instrument. 
C)  A negotiable instrument. 
D)  A holder instrument. 
E)  A delivered instrument.

Question 7

The words,"Pay to Allan Smith" followed by the endorser's signature create a(n)______ endorsement.

Accepted Answer

A)  Blank 
B)  Allonge 
C)  Qualified 
D)  Special 
E)  Specific 
A)  Blank 
B)  Allonge 
C)  Qualified 
D)  Special 
E)  Specific

Question 8

Barry is sending his brother-in-law and agent,Richard,who he does not particularly trust,to deposit into Barry's business bank account a check belonging to Barry.What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Accepted Answer

Barry should sign the back of

Question 9

Order paper must be ______ as well as _____ to be negotiated.

Accepted Answer

A)  Stamped with an allonge; delivered 
B)  Delivered; transferred 
C)  Transferred; delivered 
D)  Negotiated; held 
E)  Endorsed; delivered 
A)  Stamped with an allonge; delivered 
B)  Delivered; transferred 
C)  Transferred; delivered 
D)  Negotiated; held 
E)  Endorsed; delivered

Question 10

Set forth the five conditions under which a holder may take an instrument for value.

Accepted Answer

A holder may take an instrument for valu

Question 11

Which of the following is the term for a person creating an endorsement?

Accepted Answer

A)  An allonge 
B)  A transferor 
C)  A transferee 
D)  An endorser 
E)  An endorsee 
A)  An allonge 
B)  A transferor 
C)  A transferee 
D)  An endorser 
E)  An endorsee

Question 12

Receiving an instrument as a gift satisfies the requirement of taking an instrument for value.

Accepted Answer

A) True 
 B)False

Question 13

An instrument is dishonored when a party refuses to pay the instrument such as when a bank refuses to pay because insufficient funds exist.

Accepted Answer

A) True 
 B)False

Question 14

An instrument that reads,"Pay to the order of Jones or Green," is payable to _________ payees.

Accepted Answer

A)  Joint 
B)  Concurrent 
C)  Consecutive 
D)  Alternative 
E)  Alternate 
A)  Joint 
B)  Concurrent 
C)  Consecutive 
D)  Alternative 
E)  Alternate

Question 15

Which of the following results in an endorsement is considered qualified?

Accepted Answer

A)  A special endorsement. 
B)  Restricted endorsement. 
C)  Addition of the words, "without recourse." 
D)  Addition of the words, "conditional entrustment." 
E)  Addition of the words, "trust endorsement." 
A)  A special endorsement. 
B)  Restricted endorsement. 
C)  Addition of the words, "without recourse." 
D)  Addition of the words, "conditional entrustment." 
E)  Addition of the words, "trust endorsement."

Question 16

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

Accepted Answer

A)  Conditional endorsement. 
B)  Trust endorsement. 
C)  Endorsement to prohibit further endorsement. 
D)  Bearer endorsement. 
E)  Conditional bearer endorsement. 
A)  Conditional endorsement. 
B)  Trust endorsement. 
C)  Endorsement to prohibit further endorsement. 
D)  Bearer endorsement. 
E)  Conditional bearer endorsement.

Question 17

Susan purchased a refrigerator from ABC Appliance store for $800.She takes the refrigerator home and discovers that it is defective.She calls ABC Appliance store and tells them that she would like to return the refrigerator.ABC Appliance store tells her that they have assigned the promissory note she provided the store in order to purchase the refrigerator to a finance company and that the finance company,as a holder in due course,is not subject to defenses.Which of the following is true regarding the rights of parties?

Accepted Answer

A)  The finance company is subject to the defenses of Susan because of the Federal Trade Commission rule created to protect consumers. 
B)  ABC Appliance store is correct in that Susan cannot assert her defenses against the finance company. 
C)  Susan can assert her defenses against the finance company only if she can prove that the finance company had knowledge that ABC Appliance store sold defective equipment from time to time. 
D)  Susan can assert her defenses against the finance company only because she gave notice of the problem within 5 days of the sale. 
E)  Susan can assert her defenses against the finance company only if she agrees to arbitrate the dispute. 
A)  The finance company is subject to the defenses of Susan because of the Federal Trade Commission rule created to protect consumers. 
B)  ABC Appliance store is correct in that Susan cannot assert her defenses against the finance company. 
C)  Susan can assert her defenses against the finance company only if she can prove that the finance company had knowledge that ABC Appliance store sold defective equipment from time to time. 
D)  Susan can assert her defenses against the finance company only because she gave notice of the problem within 5 days of the sale. 
E)  Susan can assert her defenses against the finance company only if she agrees to arbitrate the dispute.

Question 18

If there is no room on an instrument for an endorsement or if all the room has been taken by previous endorsements,a(n)______ may be attached.

Accepted Answer

A)  Acknowledgement 
B)  Blank endorsement 
C)  Special endorsement 
D)  Allonge 
E)  Codicil 
A)  Acknowledgement 
B)  Blank endorsement 
C)  Special endorsement 
D)  Allonge 
E)  Codicil

Question 19

For negotiation,which of the following types of paper require only delivery of the instrument to the holder by the payee?

Accepted Answer

A)  Bearer 
B)  Delivery 
C)  Order 
D)  Transfer 
E)  Acknowledgement 
A)  Bearer 
B)  Delivery 
C)  Order 
D)  Transfer 
E)  Acknowledgement

Question 20

What is the effect of an unqualified,blank endorsement?

Accepted Answer

A)  It turns previous order paper into bearer paper. 
B)  It turns previous bearer paper into order paper. 
C)  It turns a blank endorsement into a special endorsement. 
D)  It turns an allonge into an endorsement. 
E)  It turns an endorsement into an allonge. 
A)  It turns previous order paper into bearer paper. 
B)  It turns previous bearer paper into order paper. 
C)  It turns a blank endorsement into a special endorsement. 
D)  It turns an allonge into an endorsement. 
E)  It turns an endorsement into an allonge.

Exam 27: Negotiation, Holder in Due Course, and Defenses

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Which of the following is the payee's or last endorsee's signature and nothing else?

Which of the following is true regarding Sam's rights in relation to the check?

In the event of a misspelled name,how may the holder endorse the document?

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

The words,"Pay to Allan Smith" followed by the endorser's signature create a(n)______ endorsement.

Barry is sending his brother-in-law and agent,Richard,who he does not particularly trust,to deposit into Barry's business bank account a check belonging to Barry.What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Order paper must be ______ as well as _____ to be negotiated.

Set forth the five conditions under which a holder may take an instrument for value.

Which of the following is the term for a person creating an endorsement?

Receiving an instrument as a gift satisfies the requirement of taking an instrument for value.

An instrument is dishonored when a party refuses to pay the instrument such as when a bank refuses to pay because insufficient funds exist.

An instrument that reads,"Pay to the order of Jones or Green," is payable to _________ payees.

Which of the following results in an endorsement is considered qualified?

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

If there is no room on an instrument for an endorsement or if all the room has been taken by previous endorsements,a(n)______ may be attached.

For negotiation,which of the following types of paper require only delivery of the instrument to the holder by the payee?

What is the effect of an unqualified,blank endorsement?

An Introduction to Dynamic Business Law

Business Ethics

The Uslegal System

Alternative Dispute Resolution

Constitutional Principles

International and Comparative Law

Crime and the Business Community

Tort Law

Negligence and Strict Liability

Product Liability

Liability of Accountants and Other Professionals

Intellectual Property

Introduction to Contracts

Agreement

Consideration

Capacity and Illegality

Reality of Assent

Contracts in Writing

Third Party Rights to Contracts

Performance,Breach of Contract,discharge,and Remedies

Introduction to Sales and Lease Contracts

Title,Risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Lease Contracts

Remedies for Breach of Sales and Lease Contracts

Warranties

Negotiable Instruments: Negotiability and Transferability

Liability,defenses,and Discharge

Checks and Electronic Fund Transfers

Secured Transactions

Other Creditors Remedies and Suretyship

Bankruptcy and Reorganization

Agency Formation and Duties

Liability to Third Parties and Termination

Forms of Business Organizations

Partnerships: Nature, Formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, Officers, and Shareholders

Corporations: Mergers, Consolidations, and Termination

Corporations: Securities and Investor Protection

Employment and Labor Law

Employment Discrimination

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

The Nature of Property, Personal Property, and Bailments

Real Property

Landlord-Tenant Law

Insurance Law

Wills and Trusts

Filters

Order paper must be __ as well as _ to be negotiated.