Question 1

Which kind of instrument is payable to a specific,named payee?

Accepted Answer

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

Question 2

If an instrument has no room for an endorsement or if all the room has been taken by previous endorsements,what may be attached?

Accepted Answer

A) Allonge 
B) Special endorsement 
C) Acknowledgement 
D) Codicil 
E) Blank endorsement 
A) Allonge 
B) Special endorsement 
C) Acknowledgement 
D) Codicil 
E) Blank endorsement

Question 3

An instrument that becomes overdue at any time after the expressed due date on it is which type of instrument?

Accepted Answer

A) Dishonored instrument. 
B) Overdue instrument. 
C) Altered instrument. 
D) Demand instrument. 
E) Time instrument. 
A) Dishonored instrument. 
B) Overdue instrument. 
C) Altered instrument. 
D) Demand instrument. 
E) Time instrument.

Question 4

What happens when an instrument lists two payees but is silent as to whether they are joint or alternative?

Accepted Answer

A) The instrument is non-negotiable and may not be endorsed by either payee. 
B) Courts interpret the instrument as containing joint payees,and the endorsements of both listed payees are required to negotiate it. 
C) The instrument may be endorsed by one or the other payee,but may not be endorsed by both payees. 
D) Only the endorsement of the first listed payee is required to negotiate it. 
E) Courts interpret the instrument as containing alternative payees,and the endorsement of only one listed payee is required to negotiate it. 
A) The instrument is non-negotiable and may not be endorsed by either payee. 
B) Courts interpret the instrument as containing joint payees,and the endorsements of both listed payees are required to negotiate it. 
C) The instrument may be endorsed by one or the other payee,but may not be endorsed by both payees. 
D) Only the endorsement of the first listed payee is required to negotiate it. 
E) Courts interpret the instrument as containing alternative payees,and the endorsement of only one listed payee is required to negotiate it.

Question 5

A person who engages in fraud may not obtain the rights of an HDC.

Accepted Answer

A) True 
 B)False

Question 6

The requirement that a holder in due course must take an instrument for value can be satisfied by receiving an instrument as a gift.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following did the court determine on appeal in Wawel Savings Bank v.Jersey Tractor Trailer Training Inc. ,the case in the text in which a lender who perfected an interest in a debtor's collateral claimed to have priority in bankruptcy over an entity who later entered into an agreement whereby it purchased rights to the debtor's accounts receivables?

Accepted Answer

A) The court ruled in favor of the purchaser of receivables on the basis that the agreement the lender had with the debtor did not expressly prohibit the sale of receivables. 
B) The court remanded the case for a determination as to whether the purchaser of receivables was a holder in due course or a purchaser of instruments,in which case it would prevail. 
C) The court ruled in favor of the purchaser of receivables on the basis that an immediate transaction for value was involved. 
D) Under the "first in time" rule,the court ruled in favor of the lender who perfected the interest in the debtor's collateral. 
E) Under the "first to file" rule,the court ruled in favor of the lender who perfected the interest in the debtor's collateral. 
A) The court ruled in favor of the purchaser of receivables on the basis that the agreement the lender had with the debtor did not expressly prohibit the sale of receivables. 
B) The court remanded the case for a determination as to whether the purchaser of receivables was a holder in due course or a purchaser of instruments,in which case it would prevail. 
C) The court ruled in favor of the purchaser of receivables on the basis that an immediate transaction for value was involved. 
D) Under the "first in time" rule,the court ruled in favor of the lender who perfected the interest in the debtor's collateral. 
E) Under the "first to file" rule,the court ruled in favor of the lender who perfected the interest in the debtor's collateral.

Question 8

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

Accepted Answer

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

Question 9

[Lost Check] Jenna Nguyen teaches business law at Learn-A-Lot University.Learn-A-Lot requested that all of the teachers ask the students to wear T-shirts with "Learn-A-Lot University Football" printed on the front on the day of the first football game.All of the teachers were asked to sell the shirts in class.A student,Quinn,wrote a check to Jenna for $10 for payment for one of the shirts.Quinn,however,put Jenna Nguyen as the payee.Jenna wanted to turn the check over to the school,so on the back of the check,she wrote,"Jenna Nguyen,without recourse." She then gave the check to the treasurer for Learn-A-Lot University,Amelia.Unfortunately,the treasurer for Learn-A-Lot dropped the check on the ground as she was going to the bank.A student,Brad,found the check and promptly took it to the bank and cashed it.The treasurer,Amelia,did not want to get into trouble,so she asked Jenna to personally cover the check because she said that Jenna had endorsed the check on the back guaranteeing payment.
-What type of endorsement did Jenna make on the back of the check?

Accepted Answer

A) A special qualified endorsement. 
B) A blank endorsement. 
C) A special endorsement. 
D) A blank qualified endorsement. 
E) An ineffective endorsement because the words "without recourse" have no effect. 
A) A special qualified endorsement. 
B) A blank endorsement. 
C) A special endorsement. 
D) A blank qualified endorsement. 
E) An ineffective endorsement because the words "without recourse" have no effect.

Question 10

Which is the correct term for a party who is in possession of an instrument that is payable to the party or to the bearer of the instrument?

Accepted Answer

A) A holder. 
B) A transferee. 
C) A bearer. 
D) A payee. 
E) An issuer. 
A) A holder. 
B) A transferee. 
C) A bearer. 
D) A payee. 
E) An issuer.

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

Which kind of instrument is payable to a specific,named payee?

If an instrument has no room for an endorsement or if all the room has been taken by previous endorsements,what may be attached?

An instrument that becomes overdue at any time after the expressed due date on it is which type of instrument?

What happens when an instrument lists two payees but is silent as to whether they are joint or alternative?

A person who engages in fraud may not obtain the rights of an HDC.

The requirement that a holder in due course must take an instrument for value can be satisfied by receiving an instrument as a gift.

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

Which is the correct term for a party who is in possession of an instrument that is payable to the party or to the bearer of the instrument?

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

Filters