Question 1

A holder in due course has a right to collect from the original maker of an instrument even if the maker had a personal defense.

Accepted Answer

A) True 
 B)False

Question 2

Article 3 adopts a definition of "good faith" that has subjective and objective components.

Accepted Answer

A) True 
 B)False

Question 3

If drawers, makers, and subsequent indorsers were liable to a holder in due course, which of the following would not hold true?

Accepted Answer

A)  Infancy 
B)  Forgery 
C)  Bankruptcy 
D)  Fraudulent alteration 
E)  Fraud in the execution 
A)  Infancy 
B)  Forgery 
C)  Bankruptcy 
D)  Fraudulent alteration 
E)  Fraud in the execution

Question 4

A holder in due course is subject to the obligor's personal defenses.

Accepted Answer

A) True 
 B)False

Question 5

The Federal Trade Commission (FTC) in 1976 promulgated a trade regulation rule that applied only to:

Accepted Answer

A)  credit card transactions. 
B)  purchases of interests in real property. 
C)  purchases of goods or services for commercial purposes. 
D)  consumer credit transactions. 
E)  purchases of commodities, or securities. 
A)  credit card transactions. 
B)  purchases of interests in real property. 
C)  purchases of goods or services for commercial purposes. 
D)  consumer credit transactions. 
E)  purchases of commodities, or securities.

Question 6

What are personal defenses?

Accepted Answer

Personal defenses mean that the holder i

Question 7

A person who is not a holder in due course can not obtain the rights of a holder in due course.

Accepted Answer

A) True 
 B)False

Question 8

Prior payment is a real defense.

Accepted Answer

A) True 
 B)False

Question 9

Only a holder in due course can collect on a negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 10

Of the following, _____ is a personal defense.

Accepted Answer

A)  forgery 
B)  prior payment 
C)  alteration 
D)  bankruptcy 
E)  infancy 
A)  forgery 
B)  prior payment 
C)  alteration 
D)  bankruptcy 
E)  infancy

Question 11

Drawers, makers, and subsequent indorsers are liable to a holder in due course if they have been discharged in bankruptcy.

Accepted Answer

A) True 
 B)False

Question 12

Unauthorized completion of an incomplete instrument is subject to personal defenses.

Accepted Answer

A) True 
 B)False

Question 13

According to the Federal Trade Commission, the holder-in-due-course doctrine is virtually dead in consumer credit contracts.

Accepted Answer

A) True 
 B)False

Question 14

On which of the following requirements to be a holder in due course is The Buckeye Check Cashing, Inc. v. Camp case based?

Accepted Answer

A)  Prior holder of a negotiable instrument 
B)  Holding instrument without notice 
C)  Valid claim or defense by any party 
D)  Uncured default with respect to payment of another instrument 
E)  Good faith and reasonable commercial standards 
A)  Prior holder of a negotiable instrument 
B)  Holding instrument without notice 
C)  Valid claim or defense by any party 
D)  Uncured default with respect to payment of another instrument 
E)  Good faith and reasonable commercial standards

Question 15

An instrument is payable to an identified person if she is the named payee, or if it is indorsed to her.

Accepted Answer

A) True 
 B)False

Question 16

If a person to whom an instrument was negotiated became nothing more than a holder, the law of commercial paper would not be very significant.

Accepted Answer

A) True 
 B)False

Question 17

According to the Uniform Commercial Code, _____ means an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

Accepted Answer

A)  bankruptcy 
B)  fraudulent alteration 
C)  fraud in the execution 
D)  forgery 
E)  infancy 
A)  bankruptcy 
B)  fraudulent alteration 
C)  fraud in the execution 
D)  forgery 
E)  infancy

Question 18

One that lends money to another taking back a negotiable instrument as security is a(n) _____.

Accepted Answer

A)  obligee 
B)  factor 
C)  carrier 
D)  consumer 
E)  merchant 
A)  obligee 
B)  factor 
C)  carrier 
D)  consumer 
E)  merchant

Question 19

A holder in due course takes free of all defenses of the underlying obligor.

Accepted Answer

A) True 
 B)False

Question 20

A purchaser with prior knowledge of a defective instrument can become a holder in due course.

Accepted Answer

A) True 
 B)False

Exam 24: Holder in Due Course and Defenses

A holder in due course has a right to collect from the original maker of an instrument even if the maker had a personal defense.

Article 3 adopts a definition of "good faith" that has subjective and objective components.

If drawers, makers, and subsequent indorsers were liable to a holder in due course, which of the following would not hold true?

A holder in due course is subject to the obligor's personal defenses.

The Federal Trade Commission (FTC) in 1976 promulgated a trade regulation rule that applied only to:

What are personal defenses?

A person who is not a holder in due course can not obtain the rights of a holder in due course.

Prior payment is a real defense.

Only a holder in due course can collect on a negotiable instrument.

Of the following, _____ is a personal defense.

Drawers, makers, and subsequent indorsers are liable to a holder in due course if they have been discharged in bankruptcy.

Unauthorized completion of an incomplete instrument is subject to personal defenses.

According to the Federal Trade Commission, the holder-in-due-course doctrine is virtually dead in consumer credit contracts.

On which of the following requirements to be a holder in due course is The Buckeye Check Cashing, Inc. v. Camp case based?

An instrument is payable to an identified person if she is the named payee, or if it is indorsed to her.

If a person to whom an instrument was negotiated became nothing more than a holder, the law of commercial paper would not be very significant.

According to the Uniform Commercial Code, _____ means an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

One that lends money to another taking back a negotiable instrument as security is a(n) _____.

A holder in due course takes free of all defenses of the underlying obligor.

A purchaser with prior knowledge of a defective instrument can become a holder in due course.

Introduction to Law and Legal Systems

Corporate Social Responsibility and Business Ethics

Courts and the Legal Process

Constitutional Law and Us Commerce

Administrative Law

Criminal Law

Introduction to Tort Law

Introduction to Contract Law

The Agreement

Real Assent

Consideration

Legality

Form and Meaning

Third-Party Rights

Discharge of Obligations

Remedies

Introduction to Sales and Leases

Title and Risk of Loss

Performance and Remedies

Products Liability

Bailments and the Storage, Shipment, and Leasing of Goods

Nature and Form of Commercial Paper

Negotiation of Commercial Paper

Liability and Discharge

Legal Aspects of Banking

Consumer Credit Transactions

Secured Transactions and Suretyship

Mortgages and Nonconsensual Liens

Bankruptcy

Introduction to Property: Personal Property and Fixtures

Intellectual Property

The Nature and Regulation of Real Estate and the Environment

The Transfer of Real Estate by Sale

Landlord and Tenant Law

Estate Planning: Wills, Estates, and Trusts

Insurance

Relationships Between Principal and Agent

Liability of Principal and Agent; Termination of Agency

Partnerships: General Characteristics and Formation

Partnership Operation and Termination

Hybrid Business Forms

Corporation: General Characteristics and Formation

Legal Aspects of Corporate Finance

Corporate Powers and Management

Securities Regulation

Corporate Expansion, State and Federal Regulation of Foreign Corporations, and Corporate Dissolution

Antitrust Law

Unfair Trade Practices and the Federal Trade Commission

Employment Law

International Law

Liability and Regulation of Accountants

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