Question 1

On May 1, Doug signs a check that is payable to the order of Employees Credit Corporation and that is dated July 1. This check is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because it is payable to a corporation. 
C)  nonnegotiable, because it is postdated. 
D)  nonnegotiable, because it is signed by the drawer. 
A)  negotiable. 
B)  nonnegotiable, because it is payable to a corporation. 
C)  nonnegotiable, because it is postdated. 
D)  nonnegotiable, because it is signed by the drawer. A

Question 2

Rita owes $6,000 in unpaid taxes. In the sand of Seaside Beach, she executes an instrument for that amount that otherwise meets the requirements for negotiability. This instrument is likely

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because an instrument must be on paper. 
C)  nonnegotiable, because sand is not sufficiently permanent. 
D)  nonnegotiable, because the government does not appreciate it. 
A)  negotiable. 
B)  nonnegotiable, because an instrument must be on paper. 
C)  nonnegotiable, because sand is not sufficiently permanent. 
D)  nonnegotiable, because the government does not appreciate it. C

Question 3

For an instrument to be negotiable, it must be in writing.

Accepted Answer

A) True 
 B)False  True

Question 4

For an instrument to be negotiable, it must not contain an express promise or order to pay.

Accepted Answer

A) True 
 B)False

Question 5

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 negotiable If not, why not

Accepted Answer

This instrument is a promissory note, bu

Question 6

On behalf of Digital Cable Company, Elvin signs an instrument in which he promises to deliver 1,000 feet of optic fiber cable to Financiers eBank on March 1. This instrument is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because cable is not a medium of exchange authorized or adopted by a government as currency. 
C)  nonnegotiable, because it does not indicate a specific type of cable. 
D)  nonnegotiable, because it does not recite any consideration. 
A)  negotiable. 
B)  nonnegotiable, because cable is not a medium of exchange authorized or adopted by a government as currency. 
C)  nonnegotiable, because it does not indicate a specific type of cable. 
D)  nonnegotiable, because it does not recite any consideration.

Question 7

A negotiable instrument can function as a substitute for cash.

Accepted Answer

A) True 
 B)False

Question 8

To finance the purchase of a car from Giant Auto Sales, Hoppy signs an instrument promising to pay to "Ideal Credit Union" $18,000 with interest in installments with the final payment due May 15, 2014. To be negotiable, this instrument must include on its face

Accepted Answer

A)  any conditions on the sale of the car. 
B)  any conditions to the disbursement of the funds. 
C)  any conditions to the repayment of the loan. 
D)  no conditions. 
A)  any conditions on the sale of the car. 
B)  any conditions to the disbursement of the funds. 
C)  any conditions to the repayment of the loan. 
D)  no conditions.

Question 9

Quincy draws a check payable to "Replay Stadium" to buy two season tickets to the next year's State College football games. This instrument is

Accepted Answer

A)  a bearer instrument. 
B)  an order instrument. 
C)  valid but nonnegotiable. 
D)  void. 
A)  a bearer instrument. 
B)  an order instrument. 
C)  valid but nonnegotiable. 
D)  void.

Question 10

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 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 24-1A
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 13

Shad signs a promissory note payable to Theresa "with interest" on which he conspicuously notes that it is "nonnegotiable." This instrument 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 determined 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 determined from the face of the instrument.

Question 14

Jack signs an instrument that states it is being executed "as per a contract for the sale of three magic beans dated June 1." This instrument is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because banks cannot easily process commodities. 
C)  nonnegotiable, because it includes the specific date of a contract. 
D)  nonnegotiable, because it refers to an express contract. 
A)  negotiable. 
B)  nonnegotiable, because banks cannot easily process commodities. 
C)  nonnegotiable, because it includes the specific date of a contract. 
D)  nonnegotiable, because it refers to an express contract.

Question 15

Fact Pattern 24-2A
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 16

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

Accepted Answer

A) True 
 B)False

Question 17

Any person in possession of a negotiable instrument payable to bearer is a holder.

Accepted Answer

A) True 
 B)False

Question 18

To be negotiable, an order to pay must be addressed to only one person.

Accepted Answer

A) True 
 B)False

Question 19

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 20

Kelly signs an instrument in favor of Leo that states it is "subject to a certain agreement between Kelly and Mona." This instrument 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

On May 1, Doug signs a check that is payable to the order of Employees Credit Corporation and that is dated July 1. This check is

Rita owes $6,000 in unpaid taxes. In the sand of Seaside Beach, she executes an instrument for that amount that otherwise meets the requirements for negotiability. This instrument is likely

For an instrument to be negotiable, it must be in writing.

For an instrument to be negotiable, it must not contain an express promise or order to pay.

On behalf of Digital Cable Company, Elvin signs an instrument in which he promises to deliver 1,000 feet of optic fiber cable to Financiers eBank on March 1. This instrument is

A negotiable instrument can function as a substitute for cash.

To finance the purchase of a car from Giant Auto Sales, Hoppy signs an instrument promising to pay to "Ideal Credit Union" $18,000 with interest in installments with the final payment due May 15, 2014. To be negotiable, this instrument must include on its face

Quincy draws a check payable to "Replay Stadium" to buy two season tickets to the next year's State College football games. This instrument is

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

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

Fact Pattern 24-1A Flik draws a check payable to “DeliMart” to buy groceries. -Refer to Fact Pattern 24-1A. Flik's check is most likely

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

Jack signs an instrument that states it is being executed "as per a contract for the sale of three magic beans dated June 1." This instrument is

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

Any person in possession of a negotiable instrument payable to bearer is a holder.

To be negotiable, an order to pay must be addressed to only one person.

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

Kelly signs an instrument in favor of Leo that states it is "subject to a certain agreement between Kelly and Mona." This instrument is

Introduction to Law and Legal Reasoning

Courts and Alternative Dispute Resolution

Court Procedures

Constitutional Authority to Regulate Business

Ethics and Business Decision Making

Intentional Torts and Privacy

Negligence and Strict Liability

Intellectual Property and Internet Law

Criminal Law and Cyber Crime

Nature and Terminology

Agreement in Traditional and E-Contracts

Consideration

Capacity and Legality

Mistakes, Fraud, and Voluntary Consent

The Statute of Frauds

Third Party Rights

Performance and Discharge

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

Transferability and Holder in Due Course

Liability, Defenses, and Discharge

Checks and Banking in the Digital Age

Creditors Rights and Remedies

Secured Transactions

Bankruptcy Law

Mortgages Foreclosures After the Recession

Agency Formation and Duties

Agency Liability and Termination

Employment, Immigration, and Labor Law

Employment Discrimination

Sole Proprietorships and Franchises

Partnerships and Limited Liability Partnerships

Limited Liability Companies Special Business Forms

Corporate Formation and Financing

Corporate Directors, Officers, Shareholders

Corporate Merger, Consolidation, Termination

Securities Law Corporate Governance

Law for Small Business

Administrative Law

Consumer Law

Environmental Law

Antitrust Law

Professional Liaility and Accountability

Personal Property and Bailments

Real Property Landlord-Tenant Relationships

Insurance

Wills and Trusts

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