Exam 39: Negotiation and Holder in Due Course

An art dealer sells a painting to Priya, telling her that it is an original painting made by a famous painter, and takes Priya's check for $500 in payment. Before making the sale, the art dealer was aware that the painting is not genuine, and it is a forgery. Can Priya claim any defenses against the payment made to the art dealer?

A holder in due course takes a negotiable instrument free of all:

"For collection only" is an example of a special indorsement.

The Federal Trade Commission (FTC) regulation:

An instrument that is indorsed with a special indorsement remains order paper.

Which of the following can be negotiated by transfer of possession of an instrument after indorsement by the person specified?

An instrument which reads "For deposit only" is an example of a _____ indorsement.

No indorsement is necessary to negotiate an instrument payable to bearer.

Which of the following is a real defense that can be used to avoid or reduce liability on a negotiable instrument?

If a negotiable instrument is payable on demand, it is overdue:

If someone gives you a check that is made payable "to the order of cash," you cannot negotiate the check merely by giving it to the person to whom you wish to transfer it.

Lei signs a 30-day note payable to Yuan Appliances Inc. for $500 and gives it to Yuan as payment for a washing machine. When Yuan asks Lei for payment, she refuses to pay because the washing machine does not work properly. Yuan informs a bank about Lei's refusal to pay and then negotiates the note to the bank. Which of the following statements is true of this case?

Except for the special provisions concerning depositary banks, if an order instrument is transferred without indorsement, the _____.

Ming indorsed a check from his employer by signing Ming's name and the words "without recourse." This indorsement is an example of a _____ indorsement.

Which of the following statements is true of negotiating an instrument?

The Federal Trade Commission rule designed to protect consumers against operation of the holder excludes persons who sell to consumers on credit.

If an indorsement contains the signature of the indorser along with the words indicating to whom, or to whose order, the instrument is payable, it can be termed as a _____ indorsement.

In order to become a holder in due course, a person who takes a negotiable instrument must be a holder, and take the instrument:

Any person who can trace his title to an instrument back to a holder in due course receives rights similar to a holder in due course even if he cannot meet the requirements himself. This is known as the _____.

If Jonathan indorses an instrument in blank and gives it to Lily, she _____.