Question 1

Ralph wants to transfer an instrument to Sigrid that requires Ralph's indorsement, but there is no room on the instrument. Ralph

Accepted Answer

A)  can attest in writing that he would sign the instrument if possible. 
B)  cannot transfer the instrument to Sigrid. 
C)  can sign an allonge and affix it to the instrument. 
D)  can sign a separate piece of paper and file it for later reference. 
A)  can attest in writing that he would sign the instrument if possible. 
B)  cannot transfer the instrument to Sigrid. 
C)  can sign an allonge and affix it to the instrument. 
D)  can sign a separate piece of paper and file it for later reference. C

Question 2

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. B

Question 3

DigiTech Corporation pays its employees every two weeks. Eve gets her paycheck, indorses the back ("Eve Anderson"), and, on her lunch hour, goes to cash it at DigiTech's bank, First State Bank. On the street, in a crowd, she loses the check. Greg Smith finds it. Has the check been nego?tiated to Greg? Greg signs the back of the check beneath Eve's signature and cashes it. What might Eve have done to avoid this loss?

Accepted Answer

Eve's paycheck was negotiated to Greg. Eve's blank in?dorse?ment on the back of the check converted it from an order instru?ment to a bearer instrument. A bearer instrument can be nego?tiated by delivery alone. Delivery occurred when Greg found the check. To have avoided the loss that Eve suffered, she might have been more careful with the check, or at least not signed it until she was at the bank. Also, her in?dorsement might have included on the back of the check the words "For deposit only." In that circumstance, Greg would have been unable to le?gitimately cash the check.

Question 4

A transfer by negotiation can make it possible for a holder to receive more rights in the instrument than its prior possessor had.

Accepted Answer

A) True 
 B)False

Question 5

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC.

Accepted Answer

A) True 
 B)False

Question 6

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?

Accepted Answer

No. A person who does not qualify as an

Question 7

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy is

Accepted Answer

A)  an extraordinary holder in due course. 
B)  an ordinary check passer. 
C)  an ordinary holder. 
D)  an ordinary holder in due course. 
A)  an extraordinary holder in due course. 
B)  an ordinary check passer. 
C)  an ordinary holder. 
D)  an ordinary holder in due course.

Question 8

Ina signs a check payable to Jan and gives it to her. Jan in?dorses the back, and transfers the check to Ked. To negotiate the check to Lois, Ked must

Accepted Answer

A)  write "Ked" on the back and deliver the check to Lois. 
B)  write "pay to the order of Lois [signed] Ked" on the back and de?liver the check to Lois. 
C)  only deliver the check to Lois. 
D)  transfer the check through the drawee bank. 
A)  write "Ked" on the back and deliver the check to Lois. 
B)  write "pay to the order of Lois [signed] Ked" on the back and de?liver the check to Lois. 
C)  only deliver the check to Lois. 
D)  transfer the check through the drawee bank.

Question 9

Under the shelter principle, one who acquires his or her title through an HDC acquires the HDC's rights.

Accepted Answer

A) True 
 B)False

Question 10

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.

Question 11

Any installment note payment that is less than the amount due will put the holder on notice that some of the principal is overdue.

Accepted Answer

A) True 
 B)False

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

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.

Question 13

Tyrone transfers a note by signing it and delivering it to Uri. Tyrone is

Accepted Answer

A)  an indorser. 
B)  a notary. 
C)  a note passer. 
D)  a promisor. 
A)  an indorser. 
B)  a notary. 
C)  a note passer. 
D)  a promisor.

Question 14

If a note is payable on a Sunday or holiday, then the payment of the note will be due on the next business day.

Accepted Answer

A) True 
 B)False

Question 15

A holder takes an instrument for value if he or she accepts the instru?ment as payment for an antecedent debt.

Accepted Answer

A) True 
 B)False

Question 16

A holder takes an instrument for value if he or she accepts the instru?ment as security for an antecedent debt.

Accepted Answer

A) True 
 B)False

Question 17

A restrictive indorsement requires an indorsee to comply with certain in?structions regarding the funds involved.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  an indorser. 
B)  a draft dodger. 
C)  a drafter. 
D)  a promisor. 
A)  an indorser. 
B)  a draft dodger. 
C)  a drafter. 
D)  a promisor.

Question 19

Good faith, for purposes of UCC Article 3, is "honesty in fact and the ob?servance of reasonable commercial standards of fair dealing."

Accepted Answer

A) True 
 B)False

Question 20

Velma transfers a note by signing it and delivering it to Woz. Woz is

Accepted Answer

A)  a delivery person. 
B)  an indorsee. 
C)  a note passer. 
D)  a promisee. 
A)  a delivery person. 
B)  an indorsee. 
C)  a note passer. 
D)  a promisee.

Exam 25: Transferability and Holder in Due Course

Ralph wants to transfer an instrument to Sigrid that requires Ralph's indorsement, but there is no room on the instrument. Ralph

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

A transfer by negotiation can make it possible for a holder to receive more rights in the instrument than its prior possessor had.

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC.

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?

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy is

Ina signs a check payable to Jan and gives it to her. Jan in?dorses the back, and transfers the check to Ked. To negotiate the check to Lois, Ked must

Under the shelter principle, one who acquires his or her title through an HDC acquires the HDC's rights.

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

Any installment note payment that is less than the amount due will put the holder on notice that some of the principal is overdue.

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

Tyrone transfers a note by signing it and delivering it to Uri. Tyrone is

If a note is payable on a Sunday or holiday, then the payment of the note will be due on the next business day.

A holder takes an instrument for value if he or she accepts the instru?ment as payment for an antecedent debt.

A holder takes an instrument for value if he or she accepts the instru?ment as security for an antecedent debt.

A restrictive indorsement requires an indorsee to comply with certain in?structions regarding the funds involved.

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

Good faith, for purposes of UCC Article 3, is "honesty in fact and the ob?servance of reasonable commercial standards of fair dealing."

Velma transfers a note by signing it and delivering it to Woz. Woz is

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

The Statute of Fraudswriting Requirements

Ethics and Business Decision Making

Intentional Torts

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crimes

Nature and Terminology

Agreement

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

Third Party Rights

Performance and Discharge

Breach of Contract and Remedies

E-Contracts and E-Signatures

The Formation of Sales and Lease Contracts

Title, Risk, and Insurable Interest

Performance Breach of Sales Lease Contracts

Warranties and Product Liability

The Function Creation of Negotiable Instruments

Liability, Defenses, and Discharge

Checks, the Banking System, and E-Money

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Agency Formation and Duties

Liability to Third Parties and Termination

Employment and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporationsformation and Financing

Corporationsdirectors, Officers, Shareholders

Corporationsmerger, Consolidation, Termination

Corporationssecurities Law Corporate Governance

Law for Small Businesses

Administrative Law

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Environmental Law

Antitrust Law

Personal Property and Bailments

Real Property and Landlord-Tenant Relationships

Insurance

Wills and Trusts

Professional Liaility and Accountability

International Law in a Global Economy

Legal and Ethical Issues in Business

Legal Issues

Contracts and Business Law

Contracts and Liability

Banking and Payment Systems

Loan Security and Repossession in Credit Transactions

Employment Law and Ethics

Legal Issues in Corporate Governance and Business Operations

Legal and Ethical Issues in Environmental Protection and Consumer Rights