Question 1

Negotiability can be destroyed by a conditional endorsement.

Accepted Answer

A) True 
 B)False

Question 2

The transferability of an instrument may be limited by a restrictive endorsement.

Accepted Answer

A) True 
 B)False

Question 3

Which kind of endorsement places a condition on payment?

Accepted Answer

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

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

Question 5

Once an instrument is negotiable,it remains negotiable.

Accepted Answer

A) True 
 B)False

Question 6

A transaction involving a promissory note is a legitimate documentary transaction in Russia.

Accepted Answer

A) True 
 B)False

Question 7

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

Question 8

At any date after the expressed due date on a time instrument,the instrument becomes overdue.

Accepted Answer

A) True 
 B)False

Question 9

An endorsement that is followed by a statement that restricts payment,and can be used as a defense for the endorser against the endorsee,is which of the following?

Accepted Answer

A) Special unqualified endorsement. 
B) Special qualified endorsement. 
C) Trust endorsement. 
D) Endorsement that prohibits further endorsement. 
E) Conditional endorsement. 
A) Special unqualified endorsement. 
B) Special qualified endorsement. 
C) Trust endorsement. 
D) Endorsement that prohibits further endorsement. 
E) Conditional endorsement.

Question 10

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

Question 11

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

Accepted Answer

Kostas should sign the back of

Question 12

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

Accepted Answer

A holder may take an instrument for valu

Question 13

Set forth the requirements a party must meet in order to be considered a holder in due course.

Accepted Answer

In order to be consi

Question 14

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

Accepted Answer

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

Question 15

An)________ endorsement is the endorser's signature along with a named endorsee.

Accepted Answer

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

Question 16

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

Question 17

What is the effect of the designation,"Hiro Murakami,without recourse?"

Accepted Answer

A) It has no effect on anyone,including,but not limited to,any subsequent holder. 
B) It has no effect on any subsequent holder. 
C) It means that Hiro Murakami does not provide any guarantees to subsequent holders if the instrument is later dishonored. 
D) It means that Hiro Murakami is providing that neither he nor the person who transferred the instrument to him can be held further liable to any subsequent holder. 
E) It means that Hiro Murakami is providing that any subsequent holder cannot be held liable. 
A) It has no effect on anyone,including,but not limited to,any subsequent holder. 
B) It has no effect on any subsequent holder. 
C) It means that Hiro Murakami does not provide any guarantees to subsequent holders if the instrument is later dishonored. 
D) It means that Hiro Murakami is providing that neither he nor the person who transferred the instrument to him can be held further liable to any subsequent holder. 
E) It means that Hiro Murakami is providing that any subsequent holder cannot be held liable.

Question 18

Under rules created by the FTC in the 1970s:

Accepted Answer

A) Finance companies may avoid a debtor's claims and defenses if they can prove they and the transferor company were not closely connected and they had no knowledge of the seller's promises. 
B) Finance companies that have purchased negotiable installment notes from a seller are subject to the same claims and defenses that a debtor could assert against the seller,and do not have the rights of an HDC. 
C) A subsequent holder who knows a check was dishonored when he purchased it may not receive payment under the Shelter Principle. 
D) A subsequent holder may not receive payment on a check that was dishonored even if he was not aware it was dishonored when he purchased it. 
E) Finance companies that have purchased negotiable installment notes from a seller are not subject to the claims and defenses that a debtor could assert against the seller,and therefore have all the rights of an HDC. 
A) Finance companies may avoid a debtor's claims and defenses if they can prove they and the transferor company were not closely connected and they had no knowledge of the seller's promises. 
B) Finance companies that have purchased negotiable installment notes from a seller are subject to the same claims and defenses that a debtor could assert against the seller,and do not have the rights of an HDC. 
C) A subsequent holder who knows a check was dishonored when he purchased it may not receive payment under the Shelter Principle. 
D) A subsequent holder may not receive payment on a check that was dishonored even if he was not aware it was dishonored when he purchased it. 
E) Finance companies that have purchased negotiable installment notes from a seller are not subject to the claims and defenses that a debtor could assert against the seller,and therefore have all the rights of an HDC.

Question 19

Was the check properly delivered to Brad?

Accepted Answer

A) Yes,because both Brad and the bank are considered holders in due course. 
B) Yes,because it was bearer paper,delivery occurred whenever possession was taken. 
C) No,because he was not intended to receive it. 
D) Yes,because it was order paper,delivery occurred whenever possession was taken. 
E) Yes,but only because it was thereafter presented to the bank and cashed. 
A) Yes,because both Brad and the bank are considered holders in due course. 
B) Yes,because it was bearer paper,delivery occurred whenever possession was taken. 
C) No,because he was not intended to receive it. 
D) Yes,because it was order paper,delivery occurred whenever possession was taken. 
E) Yes,but only because it was thereafter presented to the bank and cashed.

Question 20

Which of the following words are necessary for an endorsement to be considered qualified?

Accepted Answer

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

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

Negotiability can be destroyed by a conditional endorsement.

The transferability of an instrument may be limited by a restrictive endorsement.

Which kind of endorsement places a condition on payment?

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

Once an instrument is negotiable,it remains negotiable.

A transaction involving a promissory note is a legitimate documentary transaction in Russia.

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

At any date after the expressed due date on a time instrument,the instrument becomes overdue.

An endorsement that is followed by a statement that restricts payment,and can be used as a defense for the endorser against the endorsee,is which of the following?

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?

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

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

Set forth the requirements a party must meet in order to be considered a holder in due course.

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

An)________ endorsement is the endorser's signature along with a named endorsee.

What is the effect of the designation,"Hiro Murakami,without recourse?"

Under rules created by the FTC in the 1970s:

Was the check properly delivered to Brad?

Which of the following words are necessary for an endorsement to be considered qualified?

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 Legality

Legal Assent

Contracts in Writing

Third-Party Rights to Contracts

Discharge and Remedies

Introduction to Sales and Lease Contracts

Title,risk of Loss,and Insurable Interest

Performance and Obligations Under Sales and Leases

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 Organization

Partnerships: Nature, formation, and Operation

Partnerships: Termination and Limited Partnerships

Corporations: Formation and Financing

Corporations: Directors, officers, and Shareholders

Corporations: Mergers, consolidations, terminations

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

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