Question 1

A maker is secondarily liable on an instrument.

Accepted Answer

A) True 
 B)False  False

Question 2

Presentment warranties protect the person who presents an instrument for payment.

Accepted Answer

A) True 
 B)False  False

Question 3

A lack or failure of consideration is no defense to payment of a negotiable instrument to any holder.

Accepted Answer

A) True 
 B)False  False

Question 4

If a note is payable in thirty days,payment is due by midnight on the thirtieth day.

Accepted Answer

A) True 
 B)False

Question 5

An order stating "I wish you would pay" is sufficient to create a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 6

Commercial Credit Company has in its possession an instrument dated May 1,2009.The instrument is payable to the order of Alpha Company "on June 1,2009," for $5,000.In the upper left corner is an address for Beta Corporation-10 Corporate Park Avenue,Chicago,Illinois-and in the lower right corner is the signature of "Delta,Inc.,By Eve,President." In the lower left corner is stamped "ACCEPTED: Beta Corporation by Frank,President,May 5,2009." On the back is the signature of "Alpha Company by Gail,President." What type of instrument is this Is it negotiable Who,if anyone,is primarily liable on this instrument on May 1 On May 5 Who,if anyone,is secondarily liable on this instrument

Accepted Answer

No one is primarily liable on this instr

Question 7

EZ Credit Company signs an instrument payable to the order of Flem that states,"The maker of this note at the date of maturity,May 1,2013,can extend the time of payment,but for no more than a reasonable time." This instrument is

Accepted Answer

A) negotiable. 
B) nonnegotiable,because it includes an extension clause. 
C) nonnegotiable,because it is not payable within a definite time. 
D) nonnegotiable,because it is payable to a specific payee. 
A) negotiable. 
B) nonnegotiable,because it includes an extension clause. 
C) nonnegotiable,because it is not payable within a definite time. 
D) nonnegotiable,because it is payable to a specific payee.

Question 8

A drawer is primarily liable on an instrument.

Accepted Answer

A) True 
 B)False

Question 9

Nina wants to transfer a check to Opie.The check is not defective if it

Accepted Answer

A) has an obvious irregularity on its face. 
B) has been previously honored. 
C) is incomplete so that an element of negotiability is lacking. 
D) is overdue. 
A) has an obvious irregularity on its face. 
B) has been previously honored. 
C) is incomplete so that an element of negotiability is lacking. 
D) is overdue.

Question 10

A certificate of deposit may be negotiable even if it does not contain an express promise to pay.

Accepted Answer

A) True 
 B)False

Question 11

To be negotiable,an instrument must be payable in money.

Accepted Answer

A) True 
 B)False

Question 12

Vera gives Willy a $500 check as payment for a debt.Willy crudely raises the amount of the check to $5,000 and transfers it to Xtreem Sportz store for a new bike.Xtreem deposits the check in its Yankee Bank account.Vera is liable for the payment of $5,000 to

Accepted Answer

A) no one. 
B) Willy,Xtreem Sportz,and Yankee Bank. 
C) Willy only. 
D) Xtreem Sportz and Yankee Bank only. 
A) no one. 
B) Willy,Xtreem Sportz,and Yankee Bank. 
C) Willy only. 
D) Xtreem Sportz and Yankee Bank only.

Question 13

To finance the purchase of a car from Giant Auto Sales,Hoppy signs an instrument promising to pay to "Ideal Credit Union" $18,000 with interest in installments with the final payment due May 15,2014.To be negotiable,this instrument must include on its face

Accepted Answer

A) any conditions on the sale of the car. 
B) any conditions to the disbursement of the funds. 
C) any conditions to the repayment of the loan. 
D) no conditions. 
A) any conditions on the sale of the car. 
B) any conditions to the disbursement of the funds. 
C) any conditions to the repayment of the loan. 
D) no conditions.

Question 14

An instrument payable "with interest" must specify a particular rate to be negotiable.

Accepted Answer

A) True 
 B)False

Question 15

Wilbur signs a note that includes a clause under which the note's holder can delay the date of its payment indefinitely.This is

Accepted Answer

A) an acceleration clause. 
B) an extension clause. 
C) an immaturity clause. 
D) a stop-payment clause. 
A) an acceleration clause. 
B) an extension clause. 
C) an immaturity clause. 
D) a stop-payment clause.

Question 16

Vladimir negotiates a bearer instrument to Wendy by

Accepted Answer

A) assignment. 
B) delivery. 
C) presenting it in response to a demand by Wendy. 
D) promising to pay. 
A) assignment. 
B) delivery. 
C) presenting it in response to a demand by Wendy. 
D) promising to pay.

Question 17

The dishonor of an instrument relieves secondary parties of liability.

Accepted Answer

A) True 
 B)False

Question 18

Petra signs a check payable to Quincy,who indorses the back,gives it to Regional Credit Union,and receives cash.The transfer of the check from Quincy to the credit union is

Accepted Answer

A) an assignment. 
B) a negotiation. 
C) a payment. 
D) a sale. 
A) an assignment. 
B) a negotiation. 
C) a payment. 
D) a sale.

Question 19

A time draft is payable at a definite future time.

Accepted Answer

A) True 
 B)False

Question 20

Todd indorses a check,"Pay to Interstate Trucking if they deliver the lumber by May 1,2010." This is

Accepted Answer

A) a blank indorsement. 
B) a qualified indorsement. 
C) a restrictive indorsement. 
D) a special indorsement. 
A) a blank indorsement. 
B) a qualified indorsement. 
C) a restrictive indorsement. 
D) a special indorsement.

Exam 22: Negotiable Instruments: Transferability Liability

A maker is secondarily liable on an instrument.

Presentment warranties protect the person who presents an instrument for payment.

A lack or failure of consideration is no defense to payment of a negotiable instrument to any holder.

If a note is payable in thirty days,payment is due by midnight on the thirtieth day.

An order stating "I wish you would pay" is sufficient to create a negotiable instrument.

EZ Credit Company signs an instrument payable to the order of Flem that states,"The maker of this note at the date of maturity,May 1,2013,can extend the time of payment,but for no more than a reasonable time." This instrument is

A drawer is primarily liable on an instrument.

Nina wants to transfer a check to Opie.The check is not defective if it

A certificate of deposit may be negotiable even if it does not contain an express promise to pay.

To be negotiable,an instrument must be payable in money.

Vera gives Willy a $500 check as payment for a debt.Willy crudely raises the amount of the check to $5,000 and transfers it to Xtreem Sportz store for a new bike.Xtreem deposits the check in its Yankee Bank account.Vera is liable for the payment of $5,000 to

To finance the purchase of a car from Giant Auto Sales,Hoppy signs an instrument promising to pay to "Ideal Credit Union" $18,000 with interest in installments with the final payment due May 15,2014.To be negotiable,this instrument must include on its face

An instrument payable "with interest" must specify a particular rate to be negotiable.

Wilbur signs a note that includes a clause under which the note's holder can delay the date of its payment indefinitely.This is

Vladimir negotiates a bearer instrument to Wendy by

The dishonor of an instrument relieves secondary parties of liability.

Petra signs a check payable to Quincy,who indorses the back,gives it to Regional Credit Union,and receives cash.The transfer of the check from Quincy to the credit union is

A time draft is payable at a definite future time.

Todd indorses a check,"Pay to Interstate Trucking if they deliver the lumber by May 1,2010." This is

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