Question 1

A _____ indorsement can be used with either a blank indorsement or a special indorsement.

Accepted Answer

A)  rebuttal 
B)  conditional 
C)  qualified 
D)  restrictive 
A)  rebuttal 
B)  conditional 
C)  qualified 
D)  restrictive

Question 2

Which of the following is order paper?

Accepted Answer

A)  A check made out "to the order of cash." 
B)  A note payable to the order of X and indorsed in blank by X. 
C)  A note made out to Y's order and indorsed "Pay to Z,Y." 
D)  A receipt for a payment made by Z. 
A)  A check made out "to the order of cash." 
B)  A note payable to the order of X and indorsed in blank by X. 
C)  A note made out to Y's order and indorsed "Pay to Z,Y." 
D)  A receipt for a payment made by Z.

Question 3

A person who makes a completely executory promise,in return for a negotiable instrument,has given value for it.

Accepted Answer

A) True 
 B)False

Question 4

Under the most modern revision to Article 3,a depositary bank cannot become a holder of a check that is deposited by a customer without an indorsement.

Accepted Answer

A) True 
 B)False

Question 5

Svetlana Mills gives a check "payable to the order of Svetlana Mills," to a shopkeeper for some groceries.Here,the check would be considered as negotiated only upon the fulfillment of which of the following conditions?

Accepted Answer

A)  The check should be indorsed by the shopkeeper. 
B)  The check should bear the name of the shopkeeper. 
C)  Svetlana should indorse the check in the name of the shopkeeper. 
D)  Svetlana should indorse the check in her own name. 
A)  The check should be indorsed by the shopkeeper. 
B)  The check should bear the name of the shopkeeper. 
C)  Svetlana should indorse the check in the name of the shopkeeper. 
D)  Svetlana should indorse the check in her own name.

Question 6

A check becomes overdue:

Accepted Answer

A)  30 days after its date. 
B)  60 days after its date. 
C)  90 days after its date. 
D)  after a "reasonable" period of time,in the light of trade practice. 
A)  30 days after its date. 
B)  60 days after its date. 
C)  90 days after its date. 
D)  after a "reasonable" period of time,in the light of trade practice.

Question 7

Which of the following is bearer paper?

Accepted Answer

A)  A check payable to the order of X and specially indorsed to Y. 
B)  A check payable to the order of X and indorsed in blank by X. 
C)  A check payable to the order of cash and specially indorsed by the person who received it. 
D)  A check payable to the order of cash to Y. 
A)  A check payable to the order of X and specially indorsed to Y. 
B)  A check payable to the order of X and indorsed in blank by X. 
C)  A check payable to the order of cash and specially indorsed by the person who received it. 
D)  A check payable to the order of cash to Y.

Question 8

In the context of overdue instruments,if a due date for the principal has been accelerated:

Accepted Answer

A)  the instrument is overdue when the court passes a judgment to that effect. 
B)  the instrument is overdue on the day after the grace period of seven days from the accelerated due date. 
C)  the instrument is overdue on the day after the accelerated due date. 
D)  the instrument is overdue on the day of the due date. 
A)  the instrument is overdue when the court passes a judgment to that effect. 
B)  the instrument is overdue on the day after the grace period of seven days from the accelerated due date. 
C)  the instrument is overdue on the day after the accelerated due date. 
D)  the instrument is overdue on the day of the due date.

Question 9

Generally,real defenses arise out of the transaction in which the negotiable instrument was issued and are based on negotiable instruments law or contract law.

Accepted Answer

A) True 
 B)False

Question 10

When a holder makes a blank indorsement of a negotiable instrument that is bearer paper,what legal effect does this have?

Accepted Answer

A)  There is no effect-bearer paper does not need to be indorsed. 
B)  The bearer negotiates it by transfer alone and no further indorsement is necessary for negotiation. 
C)  The instrument is no longer negotiable,as it has been altered. 
D)  The instrument is converted into order paper. 
A)  There is no effect-bearer paper does not need to be indorsed. 
B)  The bearer negotiates it by transfer alone and no further indorsement is necessary for negotiation. 
C)  The instrument is no longer negotiable,as it has been altered. 
D)  The instrument is converted into order paper.

Question 11

A _____ indorsement is one where the indorser disclaims her liability to make the instrument good if the maker or drawer defaults on it.

Accepted Answer

A)  special 
B)  conditional 
C)  qualified 
D)  blank 
A)  special 
B)  conditional 
C)  qualified 
D)  blank

Question 12

Negotiation,as defined by the UCC in section 3-201,is the transfer of a negotiable instrument by one person to another person.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following indorsements is a special indorsement?

Accepted Answer

A)  "For collection only" 
B)  "Mel Gibbs" 
C)  "Pay to Jack Black in Trust for Mel Gibbs" 
D)  "Pay to the Order of Jack Black,Mel Gibbs" 
A)  "For collection only" 
B)  "Mel Gibbs" 
C)  "Pay to Jack Black in Trust for Mel Gibbs" 
D)  "Pay to the Order of Jack Black,Mel Gibbs"

Question 14

Which of the following is a personal defense against a holder in due course?

Accepted Answer

A)  Fraud in the essence 
B)  Forgery 
C)  Breach of contract 
D)  Minority or infancy 
A)  Fraud in the essence 
B)  Forgery 
C)  Breach of contract 
D)  Minority or infancy

Question 15

An indorsement is a signature of the holder typically on the back of a check.

Accepted Answer

A) True 
 B)False

Question 16

When a customer deposits a check to her account without an indorsement,then the bank:

Accepted Answer

A)  puts the sign of the manager under the typed name of the customer. 
B)  signs the customer's name. 
C)  stamps the name of the bank on the check to cover for the customer's signature. 
D)  stamps on it that it was deposited by the customer. 
A)  puts the sign of the manager under the typed name of the customer. 
B)  signs the customer's name. 
C)  stamps the name of the bank on the check to cover for the customer's signature. 
D)  stamps on it that it was deposited by the customer.

Question 17

In general,the material alteration of a completed negotiable instrument:

Accepted Answer

A)  is a complete defense against a holder in due course. 
B)  is no defense whatsoever against a holder in due course. 
C)  means that a holder in due course can enforce the instrument against the maker,but only according to its original tenor. 
D)  means that a holder in due course can enforce the instrument as modified. 
A)  is a complete defense against a holder in due course. 
B)  is no defense whatsoever against a holder in due course. 
C)  means that a holder in due course can enforce the instrument against the maker,but only according to its original tenor. 
D)  means that a holder in due course can enforce the instrument as modified.

Question 18

If a negotiable instrument is payable on demand,it is overdue:

Accepted Answer

A)  the day before the demand for payment has been made. 
B)  30 days after the demand for payment has been made. 
C)  the day after demand for the payment has been made in a proper manner. 
D)  the week after payment has been demanded. 
A)  the day before the demand for payment has been made. 
B)  30 days after the demand for payment has been made. 
C)  the day after demand for the payment has been made in a proper manner. 
D)  the week after payment has been demanded.

Question 19

What is the term for when law renders an obligation to pay an instrument void.

Accepted Answer

A)  Forgery 
B)  Comity 
C)  Illegality 
D)  Duress 
A)  Forgery 
B)  Comity 
C)  Illegality 
D)  Duress

Question 20

_____ is defined to mean "a signature (other than that of a maker,drawer or acceptor)that alone or accompanied by other words,is made on an instrument for purpose of (i)negotiating the instrument, (ii)restricting payment of the instrument,or (iii)incurring indorser's liability on the instrument."

Accepted Answer

A)  Indemnification 
B)  Recoupment 
C)  Indorsement 
D)  Ratification 
A)  Indemnification 
B)  Recoupment 
C)  Indorsement 
D)  Ratification

Exam 32: Negotiation and Holder in Due Course

A _____ indorsement can be used with either a blank indorsement or a special indorsement.

Which of the following is order paper?

A person who makes a completely executory promise,in return for a negotiable instrument,has given value for it.

Under the most modern revision to Article 3,a depositary bank cannot become a holder of a check that is deposited by a customer without an indorsement.

Svetlana Mills gives a check "payable to the order of Svetlana Mills," to a shopkeeper for some groceries.Here,the check would be considered as negotiated only upon the fulfillment of which of the following conditions?

A check becomes overdue:

Which of the following is bearer paper?

In the context of overdue instruments,if a due date for the principal has been accelerated:

Generally,real defenses arise out of the transaction in which the negotiable instrument was issued and are based on negotiable instruments law or contract law.

When a holder makes a blank indorsement of a negotiable instrument that is bearer paper,what legal effect does this have?

A _____ indorsement is one where the indorser disclaims her liability to make the instrument good if the maker or drawer defaults on it.

Negotiation,as defined by the UCC in section 3-201,is the transfer of a negotiable instrument by one person to another person.

Which of the following indorsements is a special indorsement?

Which of the following is a personal defense against a holder in due course?

An indorsement is a signature of the holder typically on the back of a check.

When a customer deposits a check to her account without an indorsement,then the bank:

In general,the material alteration of a completed negotiable instrument:

If a negotiable instrument is payable on demand,it is overdue:

What is the term for when law renders an obligation to pay an instrument void.

_____ is defined to mean "a signature (other than that of a maker,drawer or acceptor)that alone or accompanied by other words,is made on an instrument for purpose of (i)negotiating the instrument, (ii)restricting payment of the instrument,or (iii)incurring indorser's liability on the instrument."

The Nature of Law

The Resolution of Private Disputes

Business and the Constitution

Business Ethics, Corporate Social Responsibility, Corporate Governance, and Critical Thinking

Criminal Law and Procedure

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Unfair Competition

Introduction to Contracts

The Agreement: Offer

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Consideration

Reality of Consent

Capacity to Contract

Illegality

Writing

Rights of Third Parties

Performance and Remedies

Formation and Terms of Sales Contracts

Product Liability

Performance of Sales Contracts

Remedies for Breach of Sales Contracts

Personal Property and Bailments

Real Property

Landlord and Tenant

Estates and Trusts

Insurance Law

Introduction to Credit and Secured Transactions

Security Interests in Personal Property

Bankruptcy

Negotiable Instruments

Liability of Parties

Checks and Electronic Transfers

The Agency Relationship

Third-Party Relations of the Principal and the Agent

Introduction to Forms of Business and Formation of Partnerships

Operation of Partnerships and Related Forms

Partners Dissociation and Partnerships Dissolution and Winding up

Limited Liability Companies, Limited Partnerships, and Limited Liability Limited Partnerships

History and Nature of Corporations

Organization and Financial Structure of Corporations

Management of Corporations

Shareholders Rights and Liabilities

Securities Regulation

Legal and Professional Responsibilities of Auditors, Consultants, and Securities Professionals

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The Federal Trade Commission Act and Consumer Protection Laws

Antitrust: the Sherman Act

The Clayton Act, the Robinson-Patman Act, and Antitrust Exemptions and Immunities

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