Deck 26: Negotiable Instruments: Negotiability and Transferability

Question 1

A negotiable instrument must be a conditional order to pay.

Answer 1

False

Question 2

Arising in the 20th century,a currency or cash substitution is a relatively new development in the law.

Answer 2

False

Question 3

If a third party never becomes involved in the transaction,it does not matter whether an instrument may be considered negotiable.

Answer 3

True

Question 4

Acceptable words of negotiability include the words "pay to cash."

Question 5

A draft is an order by a drawer to a drawee to pay a payee.

Question 6

The UCC requirement that the signature of the creator appear in order for an instrument to be negotiable can be satisfied by an automated signature.

Question 7

Article 3 of the UCC recognizes three types of negotiable instruments: notes,drafts,and checks.

Question 8

Which of the following was the ruling of the court in the Case Opener regarding the gambler who wrote bad checks to a casino to purchase markers and then tried to avoid payment on the basis of an oral agreement by which a casino host told the gambler that he already had sufficient remaining casino credit to receive the markers?

A)The oral agreement established breach of contract;therefore,while another type of instrument would have been negotiable,the checks involved were not.
B)The oral agreement was relevant to the negotiability of the checks,and acted to excuse the gambler from liability on the checks.
C)The oral agreement established that the checks were not negotiable instruments.
D)The potential oral agreement as to the markers was irrelevant to the negotiability of the checks.
E)The oral agreement was relevant to the negotiability of the checks,but it did not affect the gambler's liability on the checks.

Question 9

Which statement is true regarding negotiation of an instrument?

A)Negotiation of an order instrument is by endorsement plus delivery,while negotiation of a bearer instrument is by delivery alone.
B)Negotiation of a bearer instrument is by endorsement plus delivery,while negotiation of an order instrument is by delivery alone.
C)Negotiation of both an order instrument and bearer instrument is by delivery alone.
D)Negotiation of both an order instrument and a bearer instrument requires both delivery and an additional three days to allow for bank clearance.
E)Negotiation of both an order instrument and bearer instrument require endorsement plus delivery.

Question 10

An instrument that merely mentions another document cannot be considered negotiable.

Question 11

All negotiable documents should be in electronic format.

Question 12

A contract that is personal or nonassignable cannot be classified as commercial paper.

Question 13

In order to satisfy the requirement of negotiability that payment be at a time certain or on demand,acceleration of payment is not allowable.

Question 14

Which of the following is true regarding payment on a time instrument?

A)It may be made payable at a past or future date so long as the method of computing interest is set forth either in the time instrument itself or in a separate document prepared in conjunction with the time instrument.
B)It must be payable at a future time,and the date must be determinable through a separate instrument prepared in conjunction with the time instrument.
C)It is payable in the same manner as a demand instrument.
D)It must be payable at a specific future time which is easily determinable from the document itself.
E)It may be made payable at a past or future date so long as a method for computing past-due interest is set forth in the document.

Question 15

A person who comes into possession of a bearer instrument by theft cannot claim the payment due on it.

Question 16

An oral negotiable instrument is not permitted by the UCC.

Question 17

Salma arranged with ABC Bank for a revolving line of credit up to $50,000 for her antique shop.The bank also required that she provide a promissory note promising payment of $50,000 to the bank or as much as may be outstanding in amounts owed to the bank payable on demand.The note allowed for partial early prepayment and for interest after default.A few months later,although Salma was not in default,the bank canceled the line of credit and demanded payment of all amounts due based on the promissory note.If the reasoning of the case in the text Reger Development,LLC v.National City Bank is followed,which of the following is the most likely result of the dispute between Salma and ABC Bank?

A)The bank will win because it had the right to call for payment of the demand instrument.
B)The bank will prevail because,although the note is not a negotiable instrument,the bank has an enforceable contract.
C)Salma will prevail because she was current on payments,and the bank did not exercise good faith in calling the note.
D)Salma will prevail because the reference to prepayment destroyed the note's negotiability.
E)Salma will prevail because the reference to interest after default destroyed the note's negotiability.

Question 18

Which statement is true regarding negotiable instruments in the European Union?

A)The European Economic Council adopted the UCC as the law in regard to negotiable instruments in all member countries of the European Union.
B)Negotiable instruments are not recognized.
C)If a transaction is defined as a negotiable instrument within a certain country,it must conform to certain general characteristics outlined by the European Economic Council.
D)The European Economic Council suggests the UCC as the law in regard to negotiable instruments in all member countries of the European Union;but in order for it to be applicable,a member country must specifically affirm adoption of the UCC.
E)The European Economic Council adopted the UCC as the law in regard to negotiable instruments in all member countries of the European Union unless a member country has specifically opted out.

Question 19

A note is a promise,by the maker of the note,to pay a payee.

Question 20

If an instrument fails to qualify as a negotiable instrument,it means the instrument fails to be an enforceable contract.

Question 21

Which of the following is true regarding the status of negotiable instruments in regard to international transactions?

A)The Uniform Commercial Code is accepted as the defining word on negotiability in North America and Europe.
B)The definitions in regard to negotiable contracts vary from country to country.
C)The United Nations Committee on Contracts defines and enforces concepts of negotiability for all member nations.
D)The World Trade Organization defines and enforces concepts of negotiability for all member nations.
E)The Uniform Negotiation Act,agreed upon by a majority of countries,addresses definitions in regard to negotiability.

Question 22

Which of the following is true regarding simple contracts as compared to negotiable instruments?

A)Simple contracts may be assigned to an assignee or negotiated to a holder while negotiable instruments may only be negotiated to a holder in due course.
B)Simple contracts may be assigned to a holder while negotiable instruments may not be assigned or negotiated.
C)Simple contracts may be assigned to an assignee or negotiated to a holder while negotiable instruments may only be negotiated to a holder.
D)Simple contracts may not be assigned while negotiable instruments may be negotiated to holder.
E)Simple contracts are assigned to an assignee,while negotiable instruments are negotiated to a holder.

Question 23

Which is the original generic term for the documents used as payments to facilitate commercial transactions?

A)Payment notes
B)Commercial paper
C)Commerce notes
D)Negotiable instruments
E)Promissory paper

Question 24

Which is the correct term for a written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain in money at either a time certain or on demand?

A)A promissory agreement
B)A negotiable agreement
C)A negotiable instrument
D)A negated instrument
E)A promised instrument

Question 25

Which of the following is known as a substitute for cash?

A)A nonnegotiable instrument
B)A negotiable instrument
C)An endorsed payable document
D)A payable document
E)A nonpayable document

Question 26

As a general rule,the promise or order to pay within a negotiable instrument must be ________ and not ________.

A)Specified;implied
B)Specified;exact
C)Implied;specified
D)Implied;exact
E)Exact;implied

Question 27

With a[n] ________ instrument,the payee or subsequent holder can demand actual payment at any time.

A)Demand
B)Recourse
C)Time
D)Nonrecourse
E)Immediate

Question 28

Which is the correct term for a promise made by a bank to pay a payee a certain amount of money at a future time?

A)A certificate of deposit
B)A check
C)A novation
D)A note
E)A draft

Question 29

When an instrument fails to meet the technical requirements necessary to qualify as a negotiable instrument,which of the following statements is true?

A)The instrument is still enforced as a negotiable instrument if the holder can establish detrimental reliance based on a reasonable belief that the instrument qualified as a negotiable instrument.
B)The instrument is still enforced as a negotiable instrument if it has been accepted by a bank.
C)The instrument is still enforced as a negotiable instrument if it has been transferred to a holder in due course.
D)The instrument is null and void and of no use to the holder.
E)The instrument may qualify as an enforceable contract.

Question 30

If an instrument fails to qualify as a negotiable instrument,which of the following statements is true?

A)The instrument by definition is a good contract only if it is made out in an amount more than $1,000.
B)The instrument by definition is a good contract only if it is made out in an amount less than $1,000.
C)The instrument by definition is a good contract.
D)Failure to qualify as a negotiable instrument does not mean the instrument fails to be a good contract.
E)The instrument by definition fails to be a good contract.

Question 31

Which of the following is a draft with respect to which the drawer and drawee are the same bank or branches of the same bank?

A)Cashier's check
B)Certified check
C)Traveler's check
D)Approved draft
E)Check certificate

Question 32

Which of the following is an example of a negotiable instrument?

A)Checks,drafts,and promissory notes
B)Checks but not drafts or promissory notes
C)Drafts and checks,but not promissory notes
D)Promissory notes and checks,but not drafts
E)Promissory notes,but not drafts or checks

Question 33

What does the banking term "float" reference?

A)The time it takes to convert a time instrument to a demand instrument.
B)The time it takes a check to go through the traditional check-clearing process and be paid.
C)The time it takes a bank authority to report a bad check to the issuing bank.
D)The time it takes to convert a nonnegotiable instrument to a negotiable instrument.
E)The time it takes to convert a demand instrument to a time instrument.

Question 34

Which of the following terms is a specific draft,drawn by the owner of a checking account,ordering the bank to pay the payee from that drawer's account?

A)Certificates of deposit
B)Check
C)Note
D)Time instrument
E)Promissory contract

Question 35

In Samuel James Thompson v.First Citizens Bank & Trust Co. ,the case in the text in which the parties disagreed as to whether an instrument referenced as a certificate of deposit was actually negotiable,which of the following was the result?

A)The court ruled that the instrument was not negotiable because it contained a condition precedent and was not an unconditional order to pay.
B)The court ruled that the instrument was not negotiable because it lacked the signature of a bank representative.
C)The court ruled that the instrument was not negotiable because it clearly stated that it was non-transferable.
D)The court ruled that the instrument was not negotiable because it lacked the signatures of both parties.
E)The court ruled that the instrument was negotiable.

Question 36

Documents used as payments to facilitate commercial transactions were labeled as under Article 3 of the UCC.

A)Commerce notes
B)Payment notes
C)Commercial paper
D)Negotiable instruments
E)Commerce paper

Question 37

What is the UCC's definition of an instrument that is "payable on demand?"

A)An instrument that states that it is payable 30 days after presentment
B)An instrument that states that it is payable on demand or at sight or otherwise indicates that it is payable at the will of the holder,or does not state any time of payment
C)Is payable within 10 days after presentment
D)An instrument that states that it is payable on demand or at sight,or that it is payable 20 days after presentment
E)An instrument that states that it is payable on demand or at sight or otherwise indicates that it is payable at the will of the holder;does not state any time of payment;or is payable within ten days after presentment

Question 38

With a[n] ________ instrument,payment can be made only at a specific time designated in the future.

A)Immediate
B)Nonrecourse
C)Recourse
D)Demand
E)Time

Question 39

The ancient ________,or law of merchants,of ________ recognized that agreements could be paid for with documents that promised payment and that these documents themselves could then be circulated as a substitute for money.

A)Lex merchantia;France
B)Lax merchant;Italy
C)Lexi merchant;France
D)Lax trade;England
E)Lex mercatoria;England

Question 40

A certificate of deposit is a ________ of the bank.

A)novation
B)promissory contract
C)draft
D)note
E)check

Question 41

Which of the following is true regarding an IOU instrument containing the language "payable on demand"?

A)The instrument is not negotiable because it does not contain an unconditional promise or order to pay,but it may be an enforceable contract.
B)The instrument is not negotiable because the words "payable on demand" are included;otherwise,the IOU instrument would contain an unconditional promise to pay.
C)The instrument contains an unconditional promise to pay but nevertheless is not negotiable because it is an IOU instrument.
D)The instrument contains an unconditional promise to pay;and,therefore,the fact that it is an IOU instrument does not affect negotiability.
E)The instrument is not negotiable,nor could it be an enforceable contract,because it does not contain an unconditional promise to pay.

Question 42

Negotiable instruments payable to whoever is bearing them are known as ________ instruments.

A)Order
B)Transactional
C)Payor
D)Demand
E)Bearer

Question 43

Which of the following is assumed by the UCC if an instrument is silent as to the time of payment?

A)That it is a void instrument
B)That it is a demand instrument
C)That it is a voidable instrument
D)That it is a nonnegotiable instrument
E)That it is a time instrument

Question 44

Under the UCC which of the following statements is sufficient to make a promise or order to pay conditional?

A)"I promise to pay from the corporate account."
B)"I promise to pay if the following occurs."
C)"I promise to pay as per the contract for the sale of goods between the parties."
D)"I promise to pay because I owe the money."
E)"Borrower may pay without penalty all or a portion of the amount owed earlier than it is due."

Question 45

Which is the correct term for a check accepted by the bank on which it is drawn?

A)Certified check
B)Cashier's check
C)Traveler's check
D)Check certificate
E)Approved draft

Question 46

Which kind of instrument names a specific payee?

A)Payor
B)Transactional
C)Demand
D)Bearer
E)Order

Question 47

Which of the following is true regarding the relationship between negotiability and an unconditional promise or order to pay?

A)An offer of unconditional partial payment satisfies requirements of negotiability.
B)A promise or order to pay must be specific and not be implied in order for negotiability to be found.
C)Simply acknowledging a debt satisfies the negotiability requirement of an unconditional promise to pay.
D)There is no such requirement in order to find negotiability.
E)A common IOU is sufficient to satisfy the negotiability requirement of an unconditional promise to pay.

Question 48

[Yard Mowing] Sophie agreed to mow Reza's yard once a week for $50 per week throughout the summer.Sophie,however,was having trouble getting her money from Reza.On one occasion,he in handwriting gave her in IOU saying "I,Reza Salehi,owe Sophie Smith $50." A couple of weeks later,Reza did not have the money to pay Sophie what he owed her,and he handwrote the following on a piece of paper and gave it to her: "I,Reza Salehi,promise to pay Sophie Smith or to bearer,the sum of $100 on Monday,July 22,2016." Sophie quit mowing Reza's yard;and,disgusted with Reza,Sophie assigned both documents to Vince.When Vince presented the documents to Reza,Reza refused to pay on the basis that after inspecting the yard,he decided that Sophie was doing a poor job.Vince told him the documents constituted negotiable instruments,but Reza pointed out that he had not signed the documents with his signature at the end.
Which of the following is true regarding the effect on negotiability of Reza's determination that Sophie did a poor job mowing the yard?

A)Sophie's performance prevents the instruments from being negotiable only if Sophie meets the burden of proof of establishing to the judge by a preponderance of the evidence that she did an acceptable job mowing the yard.
B)Sophie's performance prevents the instruments from being negotiable only if Sophie meets the burden of proof of establishing to the judge by a preponderance of the evidence that she did an acceptable job mowing the yard and that she did not sign any document agreeing that the instrument would lack negotiability upon Reza's objection.
C)Sophie's performance prevents the instruments from being negotiable only if Reza meets the burden of proof of establishing to the judge by a preponderance of the evidence that Sophie did a poor job mowing the yard,and if Sophie signed and provided to Reza a document agreeing that the instrument would lack negotiability unless she properly performed.
D)Manner of performance is not one of the listed elements for a finding of negotiability.
E)Sophie's performance prevents the instruments from being negotiable only if Reza meets the burden of proof of establishing to the judge by a preponderance of the evidence that Sophie did a poor job mowing the yard.

Question 49

Which of the following is true regarding whether an agent's signature may satisfy the requirement of negotiability that the signature of a maker or drawer appear?

A)An agent's signature on behalf of his or her principal cannot bind the principal and does not satisfy the signature requirement for negotiability.
B)A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if the instrument is for an amount over $1,000.
C)A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability.
D)A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if the instrument is in an amount of $1,000 or less.
E)An agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if specific authorization from the principal allowing the agent to act on the specific transaction at issue is attached to the document.

Question 50

What two characteristics must a written document have in order to satisfy the requirement that a negotiable instrument be in writing?

A)1)relative permanence and 2)acknowledgement.
B)1)a signature at the end by the party to be charged and 2)movability.
C)1)movability and 2)acknowledgement.
D)1)relative permanence and 2)movability.
E)1)relative permanence and 2)a signature by both parties.

Question 51

What is the effect of the instruments being written by hand?

A)Handwriting does not prevent the instrument from being considered negotiable only because Sophie would not be considered a merchant in the transaction at issue,and Reza's status as a merchant is irrelevant.
B)Handwriting does not prevent the instruments from being considered negotiable only because neither Sophie nor Reza would be considered merchants in the transactions at issue.
C)The issue of the instruments being handwritten does not prevent either from being considered negotiable.
D)Handwriting does not prevent the instruments from being considered negotiable only because Reza would not be considered a merchant in the transaction at issue,and Sophie's status as a merchant is irrelevant.
E)Handwriting does not prevent the IOU instrument from being negotiable,but it does prevent the other instrument from being negotiable.

Question 52

[Book Payment] Hye and Pat signed a contract providing that "Pat will furnish the correct used business law book for use in Hye's business law class;and on August 15,2016,Hye promises to pay Pat $50 for the book." Hye took the book and planned to pay Pat.Meanwhile,Pat properly assigned the contract Hye had signed to Jack.When Hye went to class,however,she discovered that the book was the incorrect book.When Jack asked Hye for payment,Hye refused.Hye told Jack that the book was useless to her and that she was not paying either him or Pat anything for it.Jack told Hye that he had an enforceable assignment in the form of a negotiable instrument and that he could collect regardless of whether the book was useless.Hye did not believe him.Since she was trying to save money on books,she also agreed to buy Dante's U.S.history book for $40.She had an oral agreement with Dante that he would give her the book and that she would pay him in three days.This time Hye got the right book.Dante,in writing,properly assigned the right to the $40 payment to Aris.Aris asked Hye for the money.Hye admitted her agreement with Dante but told Aris that she was not going to pay him because he did not have a negotiable instrument.Hye also purchased a communications book from Sam promising in writing to give him,to his order,a DVD she had in return the next day.
Which of the following is true regarding Jack's claim that he had a negotiable instrument and could collect from Hye?

A)The agreement is not negotiable because it does not contain words of negotiability.
B)The agreement is not negotiable because the book was the wrong book.
C)Jack is correct.
D)The agreement is not negotiable because Jack was not a party to the original contract.
E)The agreement is not negotiable both because the amount at issue is insufficient to create a negotiable instrument.

Question 53

What is the effect of Hye agreeing to give Sam a DVD in return for the book?

A)Unless Sam acknowledges in writing that the fair market value of the DVD is equivalent to the value of the book he provided to Hye,there is no enforceable contract nor is the agreement negotiable.
B)Because payment is not in a sum certain for money,Hye and Sam do not have an enforceable contract,but the requirement of negotiability regarding the form of payment has been satisfied.
C)Because payment is not in a sum certain for money,Hye and Sam do not have an enforceable contract nor does the agreement satisfy the negotiability requirement that payment be in a sum certain in money.
D)Hye and Sam have an enforceable contract,but the agreement fails to satisfy the negotiability requirement that payment be in a sum certain in money.
E)Hye and Sam have an enforceable contract,and Hye has also satisfied the negotiability condition regarding the form of payment.

Question 54

Which of the following is false regarding the UCC's signature requirement for a negotiable instrument?

A)A signature may be made manually.
B)The signature may be an assumed name.
C)The UCC prohibits an X from being used as a signature.
D)A signature may be made by means of a device or machine.
E)The signature of an agent on behalf of the principal binds the principal and satisfies the signature requirement.

Question 55

Which of the following is true regarding Hye's assertion that Aris did not have a negotiable instrument?

A)Hye is incorrect,and the document by which Dante assigned the right to Aris is a negotiable instrument in regard to her duty to pay.
B)Hye is incorrect because her admission establishes the existence of a negotiable instrument between her and Dante that could be assigned to Aris.
C)Hye is correct because her agreement with Dante was not in a writing containing words of negotiability.
D)Hye is correct because the amount at issue is insufficient to create a negotiable instrument.
E)Hye is correct because Aris was not a party to the original contract.

Question 56

Which of the following is true regarding negotiable instruments as compared to contracts?

A)Similar to contracts,negotiable instruments require offer and acceptance;but unlike contracts,negotiable instruments do not require consideration.
B)Negotiable instruments lack the requirements of contracts involving consideration,offer,and acceptance.
C)Negotiable instruments require the same elements as contracts in regard to consideration,offer and acceptance.
D)Similar to contracts,negotiable instruments require consideration.
E)A negotiable instrument is a form of a contract and may be referred to as such.

Question 57

Which of the following is true regarding the type of currency needed to satisfy the currency requirement for negotiability in this country?

A)U)S.dollars,English pounds,or Euros are the only satisfactory currency
B)U)S.dollars,English pounds,Euros,and Japanese yen are all satisfactory currency
C)U)S.dollars,English pounds,Euros,Japanese yen,and gold are all satisfactory currency
D)U)S.dollars is the only satisfactory currency
E)U)S.dollars or English pounds are the only satisfactory currency

Question 58

For an instrument to be negotiable,the instrument must indicate that it was created for the purpose of being ________.

A)Transferred
B)Retained
C)Paid
D)Banked
E)Maintained

Question 59

Which of the following does not satisfy the requirement that to be negotiable an instrument must be payable at a time certain or on demand?

A)The instrument is dated and then states that "payment will be made 5 days after the above date."
B)The instrument states a specific date for payment.
C)An instrument that permits acceleration of payment and has a fixed date of payment if the acceleration clause is not affected.
D)An instrument that states that "payment will be made 10 days after delivery of the goods."
E)An instrument that states that payments is due at a fixed time but may be extended at the election of the holder.

Question 60

When is a demand instrument,such as a check,payable?

A)At midnight the day it is issued.
B)One hour after it is issued.
C)As soon as it is issued.
D)Two days after it is issued.
E)Twenty-four hours after it is issued.

Question 61

Which of the following is a note of the bank where a payee purchases it and collects principle plus a set amount of interest in the future?

A)Cashier's check
B)Certificate of deposit
C)Certified check
D)Traveler's check
E)Draft

Question 62

Which of the following is not required for an instrument to be considered negotiable?

A)The instrument must contain an unconditional promise to pay.
B)The instrument must be signed by the maker or drawer.
C)The instrument must be payable at any indefinite future time.
D)The instrument must promise to pay a fixed amount of currency.
E)The instrument must promise to pay.

Question 63

Which Article of the UCC governs negotiable instruments?

A)Article 4
B)Article 8
C)Article 9
D)Article 3
E)Article 2

Question 64

Considering only the issue of terminology,not the issue of handwriting or whether Sophie properly performed,which of the following is true regarding whether the language "I,Reza Salehi,owe Sophie Smith $50" is insufficient to establish elements required for a negotiable instrument?

A)The language is sufficient because it acknowledges the debt and is unconditional.
B)The language is sufficient because it acknowledges the debt,and that is the only required standard.
C)The language is sufficient because it acknowledges the debt and is also a promise to pay.
D)The language is insufficient because it only acknowledges the debt and is not a promise to pay.
E)The language is sufficient only because the instrument is in an amount under $500.

Question 65

If Janet sues Bruce in his individual capacity,what burden of proof would she have to prove her claim?

A)By a preponderance of the evidence
B)Some credible evidence
C)Reasonable suspicion
D)Clear and convincing
E)Beyond a reasonable doubt

Question 66

Which of the following refers to the quality of a negotiable instrument that ensures its longevity?

A)Sustainability
B)Viability
C)Movability
D)Durability
E)Relative permanence

Question 67

Which term refers to the time it takes for a check to go through the traditional check-clearing process and be paid?

A)Float
B)Delay
C)Hold over
D)?Defer
E)Shelve

Question 68

A check is always a[n] ________ instrument and can never be a[n] ________ instrument.

A)Demand;order
B)Demand;time
C)Order;bearer
D)Time;demand
E)Time;order

Question 69

Which of the following refers to the quality of a negotiable instrument that ensures it is mobile and available?

A)Adaptable
B)Versatile
C)Movability
D)Relative permanence
E)Mobility

Question 70

Before Mehdi endorsed the check it was a[n] instrument;and after he endorsed it,the check was a[n] ________ instrument.

A)Bearer;bearer
B)Order;order
C)Order;bearer
D)Transactional;bearer
E)Order;transactional

Question 71

An instrument fails to be negotiable because it states,"payment will be made by $100 and a rare antique vase." Which of the following scenarios would render the instrument negotiable?

A)The instrument omits the rare antique vase.
B)The payment clause as-is does not preclude the instrument from being negotiable.
C)The instrument changes "and" to "or."
D)The instrument omits $100.
E)The instrument omits how payment will be made.

Question 72

[Defaulted Loan] Bruce wanted to open his own restaurant,The Burger Bar,and called his friend Janet for a loan.Janet orally agreed to loan Bruce $200,000.The agreement was not put into writing.Two years later,the loan was never repaid and is in default.The Burger Bar is bankrupt and Janet decides to sue Bruce in his individual capacity.
If the reasoning of the case in the text,Athanasios Valsamis v.Néstor Gonzáles-Romero is followed,what would Janet have to prove in court?

A)Janet does not have to prove anything,as the burden would shift to Bruce to prove an agreement did not exist.
B)Janet must prove money is due and Bruce is the responsible party.
C)Janet must prove money is due.
D)Janet must prove money is due and The Burger Bar is the responsible party.
E)Janet must prove The Burger Bar is the responsible party.

Question 73

A ________ is a two-party instrument and a ________ is a third-party instrument.

A)Check;note
B)Note;draft
C)Note;check
D)Check;draft
E)Draft;note

Question 74

Disregarding the issue of whether Sophie properly performed,is the statement "I,Reza Salehi,promise to pay Sophie Smith or to bearer,the sum of $100 on Monday,July 22,2016," without a signature anywhere else on the document,sufficient to satisfy the signature requirement of negotiability?

A)Yes,but only if Reza later signed another document confirming that he meant the handwritten statement to constitute his signature.
B)No,because it was not signed at the bottom or anywhere else on the document.
C)No,because it was not signed at the bottom.
D)Yes,it is sufficient regardless of whether it is in handwriting or not because it contains an unconditional promise to pay.
E)Yes,because it contains an unconditional promise to pay,and in the handwritten promise,the maker wrote his own name.

Question 75

In which of the following ways does an assignee from a simple contract differ from a holder of a negotiable instrument?

A)A holder has greater rights than the transferor.
B)An assignee has less rights than the transferor.
C)An assignee and a holder's rights are equivalent.
D)An assignee has greater rights than the transferor.
E)A holder has less rights than the transferor.

Question 76

Which of the following is not a bearer instrument?

A)An instrument payable to "X."
B)An instrument payable to "bearer."
C)An instrument payable to "cash."
D)An instrument payable to "the order of John Doe."
E)An instrument payable to no one.

Question 77

[Used Car Commission] William promised to sell Caileen's car for her,but he wanted a commission of 10%.Caileen signed an instrument promising to pay William a 10% commission if he sold her car.William assigned the agreement to Mehdi.Caileen's car was sold and the buyer paid Caileen.A dispute ensued between Caileen and William regarding whether William found the buyer or the buyer found Caileen.When Mehdi asked Caileen for payment on the instrument,Caileen refused.William,Caileen,and Mehdi settled their dispute without going to court and Caileen wrote Mehdi a check for $3,000.Mehdi endorsed the check on the back by signing his name planning to take it to the bank the next day.Unfortunately,Mehdi lost the check which was found by Caileen and cashed by the local bank.Caileen then left town.
Which of the following is true regarding the instrument signed by Caileen promising to pay William a 10% commission if he sold her car?

A)The instrument is not negotiable only for the reason that it is not for a sum certain.
B)The instrument is not negotiable only for the reason that Caileen is not a merchant.
C)The instrument is negotiable.
D)The instrument is not negotiable only for the reason that it is based on a condition.
E)The instrument is not negotiable because it is based on a condition and also because it is not for a sum certain.

Question 78

Which of the following instruments satisfies the requirements of negotiability?

A)An instrument that states,"payment is to be made 10 days after delivery of the goods" but fails to indicate when delivery is to be made.
B)An instrument that states,"payment is to be made at some future time after above date."
C)An instrument that states,"an extension for payment is allowable" but fails to state a fixed time for payment.
D)An instrument that states,"payment shall be in the form of stock."
E)An instrument that states,"this contract was created for the purpose of being transferred."

Question 79

Which of the following is not a requirement for an instrument to be negotiable?

A)Have an unconditional promise or order to pay.
B)Be signed by the creator of the instrument.
C)Specify a fixed sum of national currency.
D)Be an oral or written contract.
E)Contain no additional promises.

Question 80

Which of the following is the most likely result if Mehdi attempts to require that the bank reimburse him for the value of the check cashed by Caileen?

A)Because the check was a bearer instrument,the bank was authorized to pay Caileen;and Mehdi has no rights against the bank.
B)The check was an order instrument,and the bank must take the loss because it should only have provided funds to Mehdi.
C)Because the check was an order instrument,the bank was within its rights to pay Caileen because she presented the check;and Mehdi has no rights against the bank.
D)Regardless of what type of instrument the check was,the bank had no right to cash the check when presented by Caileen unless the bank can establish by a preponderance of the evidence that Caileen misrepresented herself as an agent of Mehdi.
E)Because the check was a bearer instrument,the bank must take the loss because it should only have provided the funds to Mehdi.