Question 1

In the United States, which statement is true regarding the type of currency needed to satisfy the currency requirement for negotiability in the United States?

Accepted Answer

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

Question 2

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

Accepted Answer

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

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

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

Question 5

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?

Accepted Answer

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

Question 6

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?

Accepted Answer

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

Question 7

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?

Accepted Answer

A)  A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability. 
B)  An agent's signature on behalf of his or her principal cannot bind the principal and does not satisfy the signature requirement for negotiability. 
C)  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. 
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 for an amount over $1,000. 
E)  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.

Question 8

A negotiable instrument must be a conditional order to pay.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

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

Question 10

[Auto Repair] Sam writes a check from his checking account with Banking International to pay Auto Repair for service work it performed on his vehicle.
-Under the UCC, what title does Sam hold?

Accepted Answer

A)  Drawee 
B)  Drawer 
C)  Owner 
D)  Payee 
E)  Payor

Question 11

As a general rule under UCC 3-103(a)(9), the promise or order to pay within a negotiable instrument must be ________ and not ________.

Accepted Answer

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

Question 12

With a demand instrument, the ________ can demand actual payment at any time.

Accepted Answer

A)  payor 
B)  payee or subsequent holder 
C)  lessor 
D)  government 
E)  state

Question 13

Which of the following is not a negotiable instrument?

Accepted Answer

A)  Traveler's check 
B)  U.S. Dollars 
C)  Certificate of deposit 
D)  Note 
E)  Certified check

Question 14

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?

Accepted Answer

A)  The check was an order instrument, and the bank must take the loss because it should only have provided funds to Mehdi. 
B)  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. 
C)  Because the check was a bearer instrument, the bank must take the loss because it should only have provided the funds to Mehdi. 
D)  Because the check was a bearer instrument, the bank was authorized to pay Caileen; and Mehdi has no rights against the bank. 
E)  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.

Question 15

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

Accepted Answer

A)  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. 
B)  The European Economic Council adopted the UCC as the law in regard to negotiable instruments in all member countries of the European Union. 
C)  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. 
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)  Negotiable instruments are not recognized.

Question 16

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.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

A)  It is payable in the same manner as a demand instrument. 
B)  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. 
C)  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. 
D)  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. 
E)  It must be payable at a specific future time which is easily determinable from the document itself.

Question 19

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?

Accepted Answer

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

Question 20

Which of the following are not associated with an instrument known as a traveler's check?

Accepted Answer

A)  Is payable on demand 
B)  Is drawn on or payable through a bank 
C)  Is designated by the term 'traveler's check' or similar wording 
D)  Is available only in countries that use paper currency 
E)  Requires as a condition of payment a countersignature of a person whose signature appears on the instrument

Exam 26: Negotiable Instruments: Negotiability and Transferability

In the United States, which statement is true regarding the type of currency needed to satisfy the currency requirement for negotiability in the United States?

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

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

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

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?

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?

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 negotiable instrument must be a conditional order to pay.

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

[Auto Repair] Sam writes a check from his checking account with Banking International to pay Auto Repair for service work it performed on his vehicle. -Under the UCC, what title does Sam hold?

As a general rule under UCC 3-103(a) (9) , the promise or order to pay within a negotiable instrument must be and not .

With a demand instrument, the ________ can demand actual payment at any time.

Which of the following is not a negotiable instrument?

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?

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

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.

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

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

Which of the following are not associated with an instrument known as a traveler's check?

Exam 26: Negotiable Instruments: Negotiability and Transferability

In the United States, which statement is true regarding the type of currency needed to satisfy the currency requirement for negotiability in the United States?

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

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

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

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?

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?

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 negotiable instrument must be a conditional order to pay.

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

[Auto Repair] Sam writes a check from his checking account with Banking International to pay Auto Repair for service work it performed on his vehicle. -Under the UCC, what title does Sam hold?

As a general rule under UCC 3-103(a) (9) , the promise or order to pay within a negotiable instrument must be ________ and not ________.

With a demand instrument, the ________ can demand actual payment at any time.

Which of the following is not a negotiable instrument?

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?

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

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.

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

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

Which of the following are not associated with an instrument known as a traveler's check?

As a general rule under UCC 3-103(a) (9) , the promise or order to pay within a negotiable instrument must be and not .