Question 1

An instrument that promises to pay "in gold" can be negotiable.

Accepted Answer

A) True 
 B)False  False

Question 2

An undated instrument is not negotiable.

Accepted Answer

A) True 
 B)False  False

Question 3

Fact Pattern 24-1A (Questions A1-A2 apply)
Flik draws a check payable to "DeliMart" to buy groceries.
-Refer to Fact Pattern 24-1A.With respect to Flik's check,DeliMart is

Accepted Answer

A) the drawee. 
B) the drawer. 
C) the maker. 
D) the payee. 
A) the drawee. 
B) the drawer. 
C) the maker. 
D) the payee. D

Question 4

Karen writes on a piece of paper,"I owe you $600," signs it,and gives it to Lou.This instrument is

Accepted Answer

A) negotiable. 
B) nonnegotiable,because it does not include an express promise to pay. 
C) nonnegotiable,because it does not recite any consideration. 
D) nonnegotiable,because it does not state any conditions to payment. 
A) negotiable. 
B) nonnegotiable,because it does not include an express promise to pay. 
C) nonnegotiable,because it does not recite any consideration. 
D) nonnegotiable,because it does not state any conditions to payment.

Question 5

To obtain office supplies for Doctors Medical Clinic,Elmo executes a draft in favor of Flynn.A draft is

Accepted Answer

A) a conditional promise to pay money. 
B) an unconditional written order to pay money. 
C) a qualified promise to set aside a sum of money. 
D) a restricted promise to deliver goods at a future date. 
A) a conditional promise to pay money. 
B) an unconditional written order to pay money. 
C) a qualified promise to set aside a sum of money. 
D) a restricted promise to deliver goods at a future date.

Question 6

A promissory note payable to "bearer" is not negotiable.

Accepted Answer

A) True 
 B)False

Question 7

Hayley signs an instrument payable to the order of InstaCredit,Inc.,that allows a holder to demand payment of the entire amount due,with inter?est,if Hayley fails to make a payment.This instrument is

Accepted Answer

A) negotiable. 
B) nonnegotiable,because a holder can move up the payment date. 
C) nonnegotiable,because moving up the payment date is conditional. 
D) nonnegotiable,because the exact payment date cannot be deter?mined from the face of the instrument. 
A) negotiable. 
B) nonnegotiable,because a holder can move up the payment date. 
C) nonnegotiable,because moving up the payment date is conditional. 
D) nonnegotiable,because the exact payment date cannot be deter?mined from the face of the instrument.

Question 8

Ryan signs an instrument using an "R" with a circle around it.With this mark for a signature,the instrument is

Accepted Answer

A) negotiable. 
B) nonnegotiable,because an initial does not state the signer's name. 
C) nonnegotiable,because this mark is a symbol,not a signature. 
D) nonnegotiable,because a simple mark implies a lack of serious intent. 
A) negotiable. 
B) nonnegotiable,because an initial does not state the signer's name. 
C) nonnegotiable,because this mark is a symbol,not a signature. 
D) nonnegotiable,because a simple mark implies a lack of serious intent.

Question 9

Shad signs a promissory note payable to Theresa "with interest" on which he conspicuously notes that it is "nonnegotiable." This instru?ment is

Accepted Answer

A) negotiable. 
B) nonnegotiable,because it includes the notation "nonnegotiable." 
C) nonnegotiable,because it does not specify a rate of interest. 
D) nonnegotiable,because the exact amount payable cannot be deter?mined from the face of the instrument. 
A) negotiable. 
B) nonnegotiable,because it includes the notation "nonnegotiable." 
C) nonnegotiable,because it does not specify a rate of interest. 
D) nonnegotiable,because the exact amount payable cannot be deter?mined from the face of the instrument.

Question 10

For an instrument to be negotiable,it need not be signed.

Accepted Answer

A) True 
 B)False

Question 11

A statement in an instrument that payment can be made only out of a particular fund or source renders it nonnegotiable.

Accepted Answer

A) True 
 B)False

Question 12

Fact Pattern 24-2A (Questions A3-A4 apply)
Commodity Sales Corporation and Resource Purchasing Company enter a contract for a sale of unprocessed silver.Commodity Sales draws a draft unconditionally ordering Resource Purchasing to pay $50,000 to Commodity Sales's order in sixty days.Resource Purchasing signs and dates the draft.
-Refer to Fact Pattern 24-2A.This instrument is

Accepted Answer

A) a banker's acceptance. 
B) a nonnegotiable instrument. 
C) a promissory note. 
D) a trade acceptance. 
A) a banker's acceptance. 
B) a nonnegotiable instrument. 
C) a promissory note. 
D) a trade acceptance.

Question 13

A negotiable instrument can function as a substitute for cash.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

On a sheet of paper,Elle writes,without her signature,"I acknowledge that I owe Frank $600,payable out of the proceeds of the sale of my car,a 1995 Honda Civic,which I promise to advertise 'For Sale' next week.Payment is to be made on or before six months from today." What type of instrument is this? Is it nego?tiable? If not,why not?

Accepted Answer

This instrument is a promissory note,but

Question 16

A signature can consist of a word,mark,or symbol.

Accepted Answer

A) True 
 B)False

Question 17

Fact Pattern 24-2A (Questions A3-A4 apply)
Commodity Sales Corporation and Resource Purchasing Company enter a contract for a sale of unprocessed silver.Commodity Sales draws a draft unconditionally ordering Resource Purchasing to pay $50,000 to Commodity Sales's order in sixty days.Resource Purchasing signs and dates the draft.
-Refer to Fact Pattern 24-2A.On this instrument,Commodity Sales is

Accepted Answer

A) the banker. 
B) the drawer. 
C) the maker. 
D) the trader. 
A) the banker. 
B) the drawer. 
C) the maker. 
D) the trader.

Question 18

Fact Pattern 24-1A (Questions A1-A2 apply)
Flik draws a check payable to "DeliMart" to buy groceries.
-Refer to Fact Pattern 24-1A.Flik's check is most likely

Accepted Answer

A) a certificate of deposit. 
B) an order to pay. 
C) a promise to pay. 
D) a promissory note. 
A) a certificate of deposit. 
B) an order to pay. 
C) a promise to pay. 
D) a promissory note.

Question 19

To be negotiable,an instrument must not be on material that lends itself to permanence.

Accepted Answer

A) True 
 B)False

Question 20

Kelly signs an instrument in favor of Leo that states it is "subject to a cer?tain agreement between Kelly and Mona." This instru?ment is

Accepted Answer

A) negotiable. 
B) nonnegotiable,because it is made subject to a separate agreement. 
C) nonnegotiable,because it refers to a separate agreement. 
D) nonnegotiable,because Kelly and Mona are not the same persons. 
A) negotiable. 
B) nonnegotiable,because it is made subject to a separate agreement. 
C) nonnegotiable,because it refers to a separate agreement. 
D) nonnegotiable,because Kelly and Mona are not the same persons.

Exam 24: The Function Creation of Negotiable Instruments

An instrument that promises to pay "in gold" can be negotiable.

An undated instrument is not negotiable.

Fact Pattern 24-1A (Questions A1-A2 apply) Flik draws a check payable to "DeliMart" to buy groceries. -Refer to Fact Pattern 24-1A.With respect to Flik's check,DeliMart is

Karen writes on a piece of paper,"I owe you $600," signs it,and gives it to Lou.This instrument is

To obtain office supplies for Doctors Medical Clinic,Elmo executes a draft in favor of Flynn.A draft is

A promissory note payable to "bearer" is not negotiable.

Hayley signs an instrument payable to the order of InstaCredit,Inc.,that allows a holder to demand payment of the entire amount due,with inter?est,if Hayley fails to make a payment.This instrument is

Ryan signs an instrument using an "R" with a circle around it.With this mark for a signature,the instrument is

Shad signs a promissory note payable to Theresa "with interest" on which he conspicuously notes that it is "nonnegotiable." This instru?ment is

For an instrument to be negotiable,it need not be signed.

A statement in an instrument that payment can be made only out of a particular fund or source renders it nonnegotiable.

A negotiable instrument can function as a substitute for cash.

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

A signature can consist of a word,mark,or symbol.

Fact Pattern 24-1A (Questions A1-A2 apply) Flik draws a check payable to "DeliMart" to buy groceries. -Refer to Fact Pattern 24-1A.Flik's check is most likely

To be negotiable,an instrument must not be on material that lends itself to permanence.

Kelly signs an instrument in favor of Leo that states it is "subject to a cer?tain agreement between Kelly and Mona." This instru?ment is

Introduction to Law and Legal Reasoning

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Ethics and Business Decision Making

Intentional Torts and Privacy

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Intellectual Property and Internet Law

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Agreement in Traditional and E-Contracts

Consideration

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Mistakes, fraud, and Voluntary Consent

The Statute of Frauds

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Breach of Contract and Remedies

The Formation of Sales and Lease Contracts

Title, risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

International Law in a Global Economy

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Bankruptcy and Agricultural Credit: Debts, Reporting, and Risk

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