Question 1

What is the effect on Susan's status as a holder in due course in taking the check from the customer that was four months old?

Accepted Answer

A)  There is no effect on her status as a holder in due course because an instrument such as a check is only considered overdue if it is outstanding for 150 days. 
B)  There is no effect on her status as a holder in due course because an instrument is only considered overdue if it is outstanding for 180 days. 
C)  There is no effect on her status as a holder in due course because an instrument is only considered overdue if it is outstanding for one year. 
D)  It has no effect because a check is never considered overdue. 
E)  She would not be considered a holder in due course because a check is considered overdue 90 days after its date. 
A)  There is no effect on her status as a holder in due course because an instrument such as a check is only considered overdue if it is outstanding for 150 days. 
B)  There is no effect on her status as a holder in due course because an instrument is only considered overdue if it is outstanding for 180 days. 
C)  There is no effect on her status as a holder in due course because an instrument is only considered overdue if it is outstanding for one year. 
D)  It has no effect because a check is never considered overdue. 
E)  She would not be considered a holder in due course because a check is considered overdue 90 days after its date.

Question 2

Which of the following is true regarding the complaint of Mary that she did not also endorse the instrument?

Accepted Answer

A)  She is correct because both names are required in order to provide legal endorsement. 
B)  She is correct in that her name was needed for legal endorsement, but that is only the case because of the name misspelling of Annie's name. 
C)  She is correct because regardless of whether the payees are listed with no designation as to whether they are alternate or joint, or whether the words, "or," or "and," are used to designated payees, any listed payee must endorse a note in order for it to be properly payable. 
D)  She is incorrect because Annie properly endorsed the note, and only her signature was needed. 
E)  She is incorrect, but only if it can be established that Bill Brown lacked knowledge that she had not given her consent to the form of the endorsement. 
A)  She is correct because both names are required in order to provide legal endorsement. 
B)  She is correct in that her name was needed for legal endorsement, but that is only the case because of the name misspelling of Annie's name. 
C)  She is correct because regardless of whether the payees are listed with no designation as to whether they are alternate or joint, or whether the words, "or," or "and," are used to designated payees, any listed payee must endorse a note in order for it to be properly payable. 
D)  She is incorrect because Annie properly endorsed the note, and only her signature was needed. 
E)  She is incorrect, but only if it can be established that Bill Brown lacked knowledge that she had not given her consent to the form of the endorsement.

Question 3

Susan,who owned a pet store,bought a number of dog leashes from a business called Happy Paws in Florida.Susan,who was somewhat unorganized,was very busy and told her assistant,Zach,to pay her bills,including the bill she owed to Happy Paws.Susan had lost the invoice.She knew that she owed Happy Paws $1,000,and simply told Zach to send Happy Paws $1,000.She told Zach she did not know the address,but that he should be able to find it on the Internet.Zach checked on the Internet and found a listing and an address for a company called Happy Paws in North Carolina.Zach,therefore,sent the check for $1,000 to Happy Paws in North Carolina.The bookkeeper for Happy Paws in North Carolina did not act in bad faith and thought that the check was for goods sent to Susan.The treasurer endorsed Susan's check along with a number of other checks to ABC Financing Company in order to receive operating funds.Happy Paws in North Carolina was not affiliated with the Florida Happy Paws.In fact,Happy Paws in North Carolina sold booties for children.Happy Paws in North Carolina was also in financial difficulty and went bankrupt.Happy Paws in Florida contacted Susan regarding the $1,000 they were owed.Susan and Zach then discovered their mistake.They requested that Happy Paws in North Carolina refund the money,but bankruptcy prevented that.Susan then attempted to get the funds returned from ABC Financing.What is the most likely result regarding Susan's attempt to receive the funds from ABC Financing and why?

Accepted Answer

It is unlikely that Susan will be able t

Question 4

Which of the following does not prevent a holder from being a holder in due course?

Accepted Answer

A)  Notice that the instrument is overdue. 
B)  Notice that the instrument has been dishonored. 
C)  Notice that the instrument was issued as part of a series that is in default. 
D)  Notice that the instrument has been altered or contains an unauthorized signature. 
E)  Notice that an employee other than the treasurer of a company signed an instrument. 
A)  Notice that the instrument is overdue. 
B)  Notice that the instrument has been dishonored. 
C)  Notice that the instrument was issued as part of a series that is in default. 
D)  Notice that the instrument has been altered or contains an unauthorized signature. 
E)  Notice that an employee other than the treasurer of a company signed an instrument.

Question 5

An instrument that reads,"Pay to the order of Jones and Green," establishes ________ payees.

Accepted Answer

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

Question 6

Which of the following is an instrument payable to cash or whoever is in possession of the instrument?

Accepted Answer

A)  A bearer instrument. 
B)  A delivery instrument. 
C)  An order instrument. 
D)  A transfer instrument. 
E)  An acknowledgement instrument. 
A)  A bearer instrument. 
B)  A delivery instrument. 
C)  An order instrument. 
D)  A transfer instrument. 
E)  An acknowledgement instrument.

Question 7

Discuss whether or not you believe that our law should recognize holder in due course status with its resulting rights.

Accepted Answer

Student responses will vary.Wh

Question 8

Which of the following are types of unqualified endorsements?

Accepted Answer

A)  Blank and special. 
B)  Allonge and special. 
C)  Allonge and blank. 
D)  Qualified and blank. 
E)  Qualified and special. 
A)  Blank and special. 
B)  Allonge and special. 
C)  Allonge and blank. 
D)  Qualified and blank. 
E)  Qualified and special.

Question 9

An endorsement that places a condition on payment is referred to as 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 10

Which of the following may endorse an instrument made payable to a legal entity such as a partnership?

Accepted Answer

A)  The managing partner only. 
B)  The financial officer only. 
C)  The bookkeeper only. 
D)  The treasurer only. 
E)  Any authorized representative. 
A)  The managing partner only. 
B)  The financial officer only. 
C)  The bookkeeper only. 
D)  The treasurer only. 
E)  Any authorized representative.

Question 11

Which of the following is a version of a qualified endorsement?

Accepted Answer

A)  Blank, special, and allonge. 
B)  Special and allonge, but not blank. 
C)  Special and blank, but not allonge. 
D)  Blank and allonge, but not special. 
E)  There are no qualified endorsements. 
A)  Blank, special, and allonge. 
B)  Special and allonge, but not blank. 
C)  Special and blank, but not allonge. 
D)  Blank and allonge, but not special. 
E)  There are no qualified endorsements.

Question 12

Which of the following is the principle that if an item is transferred from one person to another,the transferee acquires all the rights to transfer or have in the item?

Accepted Answer

A)  The shelter principle. 
B)  The transfer principle. 
C)  The transferee principle. 
D)  The transferor principle. 
E)  The holder principle. 
A)  The shelter principle. 
B)  The transfer principle. 
C)  The transferee principle. 
D)  The transferor principle. 
E)  The holder principle.

Question 13

Which of the following is false regarding the elements a party must meet in order to be considered a holder in due course?

Accepted Answer

A)  The party must be a holder of a complete and authentic negotiable instrument. 
B)  The holder must take the instrument for value. 
C)  The holder must take the instrument in good faith. 
D)  The holder must take the instrument without notice of defects. 
E)  The holder must either pay for the instrument or receive it as a gift. 
A)  The party must be a holder of a complete and authentic negotiable instrument. 
B)  The holder must take the instrument for value. 
C)  The holder must take the instrument in good faith. 
D)  The holder must take the instrument without notice of defects. 
E)  The holder must either pay for the instrument or receive it as a gift.

Question 14

For negotiation,which of the following types of paper require delivery and an endorsement by the holder?

Accepted Answer

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

Question 15

Which of the following was the result in the Case Opener,involving the check taken in good faith by a market; later returned to the market based on a stop payment order; and purchased from the market by the plaintiff who sued Cigna,the issuer of the check?

Accepted Answer

A)  The plaintiff was allowed to recover under the shelter principle and holder-in-due-course status. 
B)  The plaintiff was not allowed to recover because he took the check knowing of a problem. 
C)  The plaintiff was allowed to recover because the market misrepresented the status of the check. 
D)  The plaintiff was not allowed to recover because of the shelter principle and holder-in-due-course status. 
E)  The plaintiff was not allowed to recover because the market misrepresented the status of the check. 
A)  The plaintiff was allowed to recover under the shelter principle and holder-in-due-course status. 
B)  The plaintiff was not allowed to recover because he took the check knowing of a problem. 
C)  The plaintiff was allowed to recover because the market misrepresented the status of the check. 
D)  The plaintiff was not allowed to recover because of the shelter principle and holder-in-due-course status. 
E)  The plaintiff was not allowed to recover because the market misrepresented the status of the check.

Question 16

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?

Accepted Answer

A)  Blank qualified. 
B)  Special qualified. 
C)  Restrictive. 
D)  Conditional. 
E)  Trust. 
A)  Blank qualified. 
B)  Special qualified. 
C)  Restrictive. 
D)  Conditional. 
E)  Trust.

Question 17

Which of the following does the UCC define as,"honesty in fact and the observance of reasonable commercial standards for fair dealing?"

Accepted Answer

A)  Commercial standards. 
B)  Subjective reasonableness. 
C)  Objective reasonableness. 
D)  Good faith. 
E)  Reasonable investigation. 
A)  Commercial standards. 
B)  Subjective reasonableness. 
C)  Objective reasonableness. 
D)  Good faith. 
E)  Reasonable investigation.

Question 18

Which of the following is not an example of a restrictive endorsement?

Accepted Answer

A)  The endorsement for deposit or collection only. 
B)  The endorsement to prohibit further endorsement. 
C)  The conditional endorsement. 
D)  The trust endorsement. 
E)  The endorsement specifying without recourse. 
A)  The endorsement for deposit or collection only. 
B)  The endorsement to prohibit further endorsement. 
C)  The conditional endorsement. 
D)  The trust endorsement. 
E)  The endorsement specifying without recourse.

Question 19

A party cannot be a holder in due course of a non-negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following types of endorsements is used when the instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party?

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.

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

What is the effect on Susan's status as a holder in due course in taking the check from the customer that was four months old?

Which of the following is true regarding the complaint of Mary that she did not also endorse the instrument?

Which of the following does not prevent a holder from being a holder in due course?

An instrument that reads,"Pay to the order of Jones and Green," establishes ________ payees.

Which of the following is an instrument payable to cash or whoever is in possession of the instrument?

Discuss whether or not you believe that our law should recognize holder in due course status with its resulting rights.

Which of the following are types of unqualified endorsements?

An endorsement that places a condition on payment is referred to as which of the following types of endorsements?

Which of the following may endorse an instrument made payable to a legal entity such as a partnership?

Which of the following is a version of a qualified endorsement?

Which of the following is the principle that if an item is transferred from one person to another,the transferee acquires all the rights to transfer or have in the item?

Which of the following is false regarding the elements a party must meet in order to be considered a holder in due course?

For negotiation,which of the following types of paper require delivery and an endorsement by the holder?

Which of the following was the result in the Case Opener,involving the check taken in good faith by a market; later returned to the market based on a stop payment order; and purchased from the market by the plaintiff who sued Cigna,the issuer of the check?

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?

Which of the following does the UCC define as,"honesty in fact and the observance of reasonable commercial standards for fair dealing?"

Which of the following is not an example of a restrictive endorsement?

A party cannot be a holder in due course of a non-negotiable instrument.

Which of the following types of endorsements is used when the instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party?

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