Question 1

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. B

Question 2

Kelly signs an instrument in favor of Leo that states it is "subject to a cer?tain agreement between Kelly and Mona." This instru?ment 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. B

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

A time draft is payable at a definite future time.

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

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.

Question 8

A signature can consist of a word,mark,or symbol.

Accepted Answer

A) True 
 B)False

Question 9

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 10

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 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

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 deter?mined 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 deter?mined from the face of the instrument.

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

An instrument that promises to pay "in gold" can be negotiable.

Accepted Answer

A) True 
 B)False

Question 16

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 17

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

Accepted Answer

A) True 
 B)False

Question 18

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 instru?ment 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 19

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 20

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.

Exam 24: B: The Function Creation of Negotiable Instruments

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 cer?tain agreement between Kelly and Mona." This instru?ment is

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

A time draft is payable at a definite future time.

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

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

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

A signature can consist of a word,mark,or symbol.

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

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

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

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

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

An instrument that promises to pay "in gold" can be negotiable.

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

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

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 instru?ment is

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

A: Introduction to Law and Legal Reasoning

B: Introduction to Law and Legal Reasoning

C: Introduction to Law and Legal Reasoning

D: Introduction to Law and Legal Reasoning

A: Courts and Alternative Dispute Resolution

B: Courts and Alternative Dispute Resolution

A: Court Procedures

B: Court Procedures

A: Constitutional Authority to Regulate Business

B: Constitutional Authority to Regulate Business

A: Ethics and Business Decision Making

B: Ethics and Business Decision Making

A: Intentional Torts and Privacy

B: Intentional Torts and Privacy

A: Negligence and Strict Liability

B: Negligence and Strict Liability

C: Negligence and Strict Liability

D: Negligence and Strict Liability

A: Intellectual Property and Internet Law

B: Intellectual Property and Internet Law

A: Criminal Law and Cyber Crimes

B: Criminal Law and Cyber Crime

A: Nature and Terminology

B: Nature and Terminology

C: Nature and Terminology

D: Nature and Terminology

A: Agreement in Traditional and E-Contracts

B: Agreement in Traditional and E-Contracts

A: Consideration

B: Consideration

A: Capacity and Legality

B: Capacity and Legality

A: Mistakes,fraud,and Voluntary Consent

B: Mistakes,fraud,and Voluntary Consent

A: The Statute of Frauds

B: The Statute of Frauds

A: Third Party Rights

B: Third Party Rights

A: Performance and Discharge

B: Performance and Discharge

A: Breach of Contract and Remedies

B: Breach of Contract and Remedies

A: The Formation of Sales and Lease Contracts

B: The Formation of Sales and Lease Contracts

C: The Formation of Sales and Lease Contracts

D: The Formation of Sales and Lease Contracts

A: Title,risk,and Insurable Interest

B: Title,risk,and Insurable Interest

A: Performance Breach of Sales Lease Contracts

B: Performance Breach of Sales Lease Contracts

A: Warranties and Product Liability

B: Warranties and Product Liability

A: International Law in a Global Economy

B: International Law in a Global Economy

A: The Function Creation of Negotiable Instruments

C: The Function Creation of Negotiable Instruments

D: The Function Creation of Negotiable Instruments

A: Transferability and Holder in Due Course

B: Transferability and Holder in Due Course

A: Liability,defenses,and Discharge