Exam 27: Negotiation, Holder in Due Course, and Defenses

Which of the following results in an endorsement is considered qualified?

Which of the following is an instrument payable to a specific, named payee?

If there is no room on an instrument for an endorsement or if all the room has been taken by previous endorsements, a(n) ______ may be attached.

A party cannot be a holder in due course of a non-negotiable instrument.

"Check Cashing Business." Susan owns and operates a check cashing business. A regular customer, Bob, comes in and cashes a $2,000 check issued by ABC Trucking. The day after Susan cashed the check, she received a notice from ABC Trucking that some checks had been stolen. It was later discovered that the checks she cashed for Bob had been stolen. At the time she took the check, Susan was very busy with several customers in line. She simply glanced at the check and cashed it. A reasonable examination would have revealed that the check had been materially altered and changed from the amount of $200 to $2,000. Susan decided that she needed to hire some people to help her because she also had a problem with another check. On the same day that she took Bob's check, she took a check from another customer, Maurice. It was later discovered that the check, which was four months old, was the subject of a dispute between Maurice and the issuer of the check for whom Maurice had done some work. The issuer claimed that the work was improperly done. Both ABC Trucking and the issuer of the check to Maurice had stopped payment on the checks. Susan claimed that as a holder in due course, she was entitled to payment on both checks -What is the effect on Susan's status as a holder in due course in taking the check from the customer that was four months old?

Susan purchased a refrigerator from ABC Appliance store for $800. She takes the refrigerator home and discovers that it is defective. She calls ABC Appliance store and tells them that she would like to return the refrigerator. ABC Appliance store tells her that they have assigned the promissory note she provided the store in order to purchase the refrigerator to a finance company and that the finance company, as a holder in due course, is not subject to defenses. Which of the following is true regarding the rights of parties?

Which of the following is the payee's or last endorsee's signature and nothing else?

Which of the following did the court determine on appeal in Wawel Savings Bank v. Jersey Tractor Trailer Training Inc., the case in the text in which a lender who perfected an interest in a debtor's collateral claimed to have priority in bankruptcy over an entity who later entered into an agreement whereby it purchased rights to the debtor's accounts receivables?

For negotiation, which of the following types of paper require delivery and an endorsement by the holder?

Order paper must be ______ as well as _____ to be negotiated.

Which of the following was the result in the Case Opener, involving the check taken in good faith by a market; later returned to the market based on a stop payment order; and purchased from the market by the plaintiff who sued Cigna, the issuer of the check?

"Lost Check." Susan Jones teaches business law at Learn-A-Lot University. Learn-A-Lot requested that all of the teachers ask the students to wear on the day of the first football game T-shirts with "Learn-A-Lot University Football" printed on the front. All of the teachers were asked to sell the shirts in class. A student, Bobby, wrote a check to Susan for $10 for payment for one of the shirts. Bobby, however, put Susan Jones as the payee. Susan wanted to turn the check over to the school, so on the back of the check, she wrote, "Susan Jones, without recourse." She then gave the check to the treasurer for Learn-A-Lot University. Unfortunately, the treasurer for Learn-A-Lot dropped the check on the ground as she was going to the bank. A student, Shifty, found the check and promptly took it to the bank and cashed it. The treasurer, Bernice, did not want to get into trouble, so she asked Susan to personally cover the check because she said that Susan had endorsed the check on the back guaranteeing payment. -Would the school be able to require that Susan cover the amount of the check based on the law of negotiable instruments?

"House Painting." Susie Smith signed a check agreeing to pay, "Annie Greene, Mary Hodge," $1,000. The payment was for painting her house. A problem with the note was that it spelled Annie's last name, "Greene," whereas Annie spells it simply, "Green." Annie and Mary were having a disagreement regarding how to split up the funds for painting the house. Annie proceeded to sign the check on the back, "Annie Green," and presented it to Bill Brown to satisfy a debt that she owed him. Bill Brown endorsed the check on the back, "Bill Brown, without recourse," and gave it to his nephew, Sam, who took it to the bank for payment. Meanwhile, Susie has stopped payment on the check because following a rain storm, all the paint on the house looked spotted. Mary is unhappy because she did not obtain any of the funds and stated that Annie could not legally endorse the instrument because it misspelled her name and also because she, Mary, did not sign it. -What is the effect of the designation, "Bill Brown, without recourse?"

An endorsement to prohibit further endorsement prohibits further transfer.

Which of the following is the term for a person creating an endorsement?

For negotiation, which of the following types of paper require only delivery of the instrument to the holder by the payee?

A conditional endorsement destroys negotiability.

Set forth the requirements a party must meet in order to be considered a holder in due course.

Which of the following is not an example of a restrictive endorsement?

Which of the following does not prevent a holder from being a holder in due course?