Exam 25: Transferability and Holder in Due Course

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Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.When Trey writes "Pay to Trey" above Rollo's signature,the check becomes

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Question 1

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Eppie gives a check to Fund Investments to buy 100 shares of stock in GR8 Tech Corporation for Eppie.The price of the shares is constantly fluctuating.Fund Investments asks Eppie to leave the amount of the check blank and allow it to fill in the price when making the purchase.Eppie agrees.Fund Investments buys the stock when the price is $4,000,but fills in the check for $5,000.The check is negotiated as payment for a $5,000 debt to Hasty Accounting Services,which takes the check in good faith and without no?tice of Fund Investments's act.Hasty later learns that Fund Investments was not author?ized to fill in the check for $1,000 over the price.Is Hasty an HDC? If so,for how much?

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Hasty is an HDC to the extent of $5,000,the amount of the preexisting debt that Fund Investments owed Hasty,and for which Hasty accepted the check as payment.To qualify as an HDC,a holder must give value for a negotiable instrument.Taking an instrument as payment for an antecedent claim is giving value.Hasty accepted the $5,000 check from Fund Investments as payment for the debt.This is value.Hasty accepted this check before receiving notice of Eppie's defense against payment of it,so Hasty is an HDC for this amount.Even if Hasty had known that the check was incomplete when it was given to Fund Investments,Hasty would have qualified as an HDC.Knowledge that an incomplete instrument has been completed is not notice of a defense against payment.Eppie is liable to Hasty for the amount of the check as completed.

Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.After Trey writes "Pay to Trey" above Rollo's signature,further negotiation of the check

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Question 3

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Ivy signs a check payable to Jon and gives it to him.Jon in?dorses the back,and transfers the check to Ked.To negotiate the check to Luis,Ked must

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Question 4

Bob receives a check from Chris.Without Bob's knowledge,Dan indorses it in his own name and deposits it in his account at Elm City Bank.In Bob's subsequent suit against the bank for the money,the court will most likely rule in favor of

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Question 5

Clem gets a $100 check as a gift from Daria.Clem crudely increases the amount of the check to $1,00-the alteration is obvious-and transfers it to eReady Sets,Inc.,in exchange for a 3D HD TV.eReady deposits the check in its bank account at First Town Bank.HDCs of this check include

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Question 6

Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.By writing "Pay to Trey" above Rollo's signature,Trey

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Question 7

Colby fraudulently induces Dian to sign a note.Colby sells the note to Elen,who does not know of the fraud and takes the note for value and in good faith,and thus becomes an HDC.Elen sells the note to Fred,who sells the note back to Colby.Does Colby acquire Elen's HDC rights in the note?

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Question 8

A person who receives an instrument as a gift normally becomes an ordinary holder.

(True/False)

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Question 9

A holder does not take an instrument for value if he or she gives a negotiable instrument as pay?ment.

(True/False)

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Question 10

A person who acquires a check stamped "insufficient funds" is put on no?tice and thereby acquires HDC status.

(True/False)

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Question 11

If a person purchasing an instrument does not know and has no reason to know that it has been dishonored,the person cannot become an HDC.

(True/False)

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Question 12

Dora receives a check from Eagle Corporation.Dora in?dorses the check to First National Bank by writing "pay to First Nat'l Bank only" and signing her name.This is

(Multiple Choice)

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Question 13

Ollie negotiates an order instrument to Phil by

(Multiple Choice)

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Question 14

Knowledge of one defense precludes a holder from asserting HDC status in regard to all other defenses.

(True/False)

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Question 15

The effect of a conditional indorsement on the back of an instrument is the same as the effect of conditional language that appears on its face.

(True/False)

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Question 16

An executory promise does not constitute sufficient value to make the promisor a holder.

(True/False)

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Question 17

Florencia,who is not a GigaBank customer,attempts to cash a check drawn on the bank.The check is considered dishonored if GigaBank

(Multiple Choice)

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Question 18

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

(Multiple Choice)

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Question 19

Tiffany transfers a draft by signing it and delivering it to Uma.Tiffany is

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Question 20

Showing 1 - 20 of 42

Exam 25: Transferability and Holder in Due Course

Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.When Trey writes "Pay to Trey" above Rollo's signature,the check becomes

Ivy signs a check payable to Jon and gives it to him.Jon in?dorses the back,and transfers the check to Ked.To negotiate the check to Luis,Ked must

Bob receives a check from Chris.Without Bob's knowledge,Dan indorses it in his own name and deposits it in his account at Elm City Bank.In Bob's subsequent suit against the bank for the money,the court will most likely rule in favor of

Clem gets a $100 check as a gift from Daria.Clem crudely increases the amount of the check to $1,00-the alteration is obvious-and transfers it to eReady Sets,Inc.,in exchange for a 3D HD TV.eReady deposits the check in its bank account at First Town Bank.HDCs of this check include

Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.By writing "Pay to Trey" above Rollo's signature,Trey

Colby fraudulently induces Dian to sign a note.Colby sells the note to Elen,who does not know of the fraud and takes the note for value and in good faith,and thus becomes an HDC.Elen sells the note to Fred,who sells the note back to Colby.Does Colby acquire Elen's HDC rights in the note?

A person who receives an instrument as a gift normally becomes an ordinary holder.

A holder does not take an instrument for value if he or she gives a negotiable instrument as pay?ment.

A person who acquires a check stamped "insufficient funds" is put on no?tice and thereby acquires HDC status.

If a person purchasing an instrument does not know and has no reason to know that it has been dishonored,the person cannot become an HDC.

Dora receives a check from Eagle Corporation.Dora in?dorses the check to First National Bank by writing "pay to First Nat'l Bank only" and signing her name.This is

Ollie negotiates an order instrument to Phil by

Knowledge of one defense precludes a holder from asserting HDC status in regard to all other defenses.

The effect of a conditional indorsement on the back of an instrument is the same as the effect of conditional language that appears on its face.

An executory promise does not constitute sufficient value to make the promisor a holder.

Florencia,who is not a GigaBank customer,attempts to cash a check drawn on the bank.The check is considered dishonored if GigaBank

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

Tiffany transfers a draft by signing it and delivering it to Uma.Tiffany is

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