Question 1

To be negotiable, an instrument must have conditional promises attached to it.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

A mere reference in an instrument to another writing makes the promise or order conditional.

Accepted Answer

A) True 
 B)False

Question 4

Bagels n' Coffee Café issues an instrument in favor of Eatery Supplies, Inc. For the instrument to be negotiable, it must

Accepted Answer

A)  be a conditional promise or order to pay. 
B)  be payable on demand or at a specific time. 
C)  be signed by the payee. 
D)  recite the consideration given in exchange for it. 
A)  be a conditional promise or order to pay. 
B)  be payable on demand or at a specific time. 
C)  be signed by the payee. 
D)  recite the consideration given in exchange for it.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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. 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 7

A certificate of deposit is a type of note.

Accepted Answer

A) True 
 B)False

Question 8

On a trade acceptance, the drawer is also the drawee.

Accepted Answer

A) True 
 B)False

Question 9

Hayley signs an instrument payable to the order of InstaCredit, Inc., that allows a holder to demand payment of the entire amount due, with interest, 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 determined 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 determined from the face of the instrument.

Question 10

The accounting department of Delta Sales Company receives an instrument that states, "March 16, 2011. Thirty days after date, I promise to pay to the order of cash, $700 (seven hundred and 00/100 dollars), in Denver, Colorado, with interest at the rate of 7% (seven percent) per year. This instrument is secured by a contract for the sale of a computer. Due April 15, 2011. [Signed] Edward Jones." What type of instrument is this Is it negotiable If not, why not

Accepted Answer

This instrument is a promissory note and

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Locke signs a check payable to the order of Metro Bank, filling in the blanks for the amount with the figures "$100" and "One thousand and 00/100 dollars." This check is payable in the amount of

Accepted Answer

A)  $0. 
B)  $100. 
C)  $1,000. 
D)  $1,100. 
A)  $0. 
B)  $100. 
C)  $1,000. 
D)  $1,100.

Question 13

Fact Pattern 24-1A
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.

Question 14

Rainey signs a promissory note for $10,000 in favor of State University (SU). The note is undated but specifies that it is "payable one month after date." This note is

Accepted Answer

A)  negotiable. 
B)  nonnegotiable, because one month is not a reasonable time. 
C)  nonnegotiable, because there is no option to pay early. 
D)  nonnegotiable, because the maturity date cannot be determined from the face of the instrument. 
A)  negotiable. 
B)  nonnegotiable, because one month is not a reasonable time. 
C)  nonnegotiable, because there is no option to pay early. 
D)  nonnegotiable, because the maturity date cannot be determined from the face of the instrument.

Question 15

An undated instrument is not negotiable.

Accepted Answer

A) True 
 B)False

Question 16

A check is a time instrument because it is payable in due time.

Accepted Answer

A) True 
 B)False

Question 17

To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2042. To be negotiable, this instrument must include the signature of

Accepted Answer

A)  a non-party witness. 
B)  Tuna or Tuna's realtor. 
C)  Uri. 
D)  Verity's chief financial officer. 
A)  a non-party witness. 
B)  Tuna or Tuna's realtor. 
C)  Uri. 
D)  Verity's chief financial officer.

Question 18

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 19

An instrument is not negotiable if it is not payable at a definite time.

Accepted Answer

A) True 
 B)False

Question 20

A time draft is payable at a definite future time.

Accepted Answer

A) True 
 B)False

Exam 24: The Function Creation of Negotiable Instruments

To be negotiable, an instrument must have conditional promises attached to it.

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

A mere reference in an instrument to another writing makes the promise or order conditional.

Bagels n' Coffee Café issues an instrument in favor of Eatery Supplies, Inc. For the instrument to be negotiable, it must

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

A certificate of deposit is a type of note.

On a trade acceptance, the drawer is also the drawee.

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

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

Locke signs a check payable to the order of Metro Bank, filling in the blanks for the amount with the figures "$100" and "One thousand and 00/100 dollars." This check is payable in the amount of

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

Rainey signs a promissory note for $10,000 in favor of State University (SU). The note is undated but specifies that it is "payable one month after date." This note is

An undated instrument is not negotiable.

A check is a time instrument because it is payable in due time.

To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2042. To be negotiable, this instrument must include the signature of

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

An instrument is not negotiable if it is not payable at a definite time.

A time draft is payable at a definite future time.

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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