Exam 18: Holder in Due Course, Liability, and Defenses

According to the Uniform Commercial Code,________ is defined as "honesty in fact and the observance of reasonable commercial standards of fair dealing."

Which of the following is not a requirement for becoming a holder in due course?

According to Uniform Commercial Code Article 3,which of the following is a personal defense to liability on a negotiable instrument?

A(n)________ is a person who signs an instrument to restrict payment of it,negotiate it,or incur liability.

A(n)________ is a party who signs an instrument to provide credit for another party who has also signed the instrument.

When will a party's negligence not permit the party to escape liability for an unauthorized signature?

How can an accommodation party sign an instrument?

Which of the following are types of warranties regarding instruments?

What type of liability arises when the transfer of the instrument breaches a warranty associated with the instrument?

Which of the following results in liability of the principal because the principal approved of an unauthorized agent's signature?

The Uniform Commercial Code imposes liability if the party,or the party's agent,signs the instrument.

Under the Uniform Commercial Code,how can a proper presentment be made?

What type of liability occurs when a person signs a negotiable instrument?

Regardless of whether a transfer is through an endorsement,transfer warranties apply to any future holders.

Which of the following is a person who orders the drawee to pay?

What are the conditions for a drawer or endorser to become liable?

When a party's liability for a negotiable instrument is terminated,this party's liability has been ________.

Which of the following occurs when a former holder of an instrument has the instrument transferred back to him or her by negotiation or other means?

According to the Uniform Commercial Code,a party may be a holder in due course of a non-negotiable instrument.

Angry employee.Martin is in charge of payroll and other expenses for ABC,Inc.He becomes very angry with his boss Adam because Adam started dating Martin's girlfriend Stacy.Martin decided to quit but not before he got some extra money from ABC,Inc.Martin wrote five checks from the account of ABC,Inc.to pay off the five credit card companies that Martin owed money.The credit card companies took the checks without reason to be suspicious as to the source of payment.The checks to the credit card companies in total amounted to $30,000,and each check was in an amount under $10,000.Martin also made out ten checks on the account of ABC to twenty alleged employees who did not really exist.Each of these checks was in the amount of $5,000.Martin took the checks,endorsed and cashed the checks in the names of the various fake employees,and kept the cash.Finally,Martin discovers through office gossip that Adam has been looking for another job with XYZ,Inc.located in a neighboring state and that Adam is supposed to go there for an in person interview in a few weeks.Martin sets up an interview with XYZ,Inc.pretends to be Adam,and induces XYZ,Inc.to give him,posing as Adam,a check for $5,000 as a signing bonus.Martin immediately endorses the check pretending to be Adam and pockets the cash.Finally,Martin leaves town heading for the Caribbean.Is XYZ,Inc.entitled to a refund from its bank for the check the bank paid to Martin posing as Adam?