Question 1

Which of the following would not be negotiable?

Accepted Answer

A)  A written, signed promise to pay  $50,000 to the order of Crouch, and the maker of the note orally stated to Crouch that the money would only be paid if all contractual specifications were met. 
B)  A written, signed promise to pay  $500 and a rick of firewood on or before September 10. 
C)  A written, signed promise which includes a statement that, "This note is given in partial payment for a piano to be delivered in one week from date in accordance with a contract of this date between the maker and the payee." 
D)  A check for $475, made payable to Bob Owens, with tomorrow's date on it.

Question 2

A cashier's check is a check drawn by a bank upon itself to the order of a named payee.

Accepted Answer

A) True 
 B)False

Question 3

Reed signed and delivered a negotiable promissory note payable to Anne. Anne negotiated the note to Rodrigo. Rodrigo now has the same legal status as an assignee of a contract.

Accepted Answer

A) True 
 B)False

Question 4

Form of the document has no effect on negotiability, as long as the information is correct.

Accepted Answer

A) True 
 B)False

Question 5

To have the full benefit of negotiability, negotiable instruments must:

Accepted Answer

A)  meet the requirements of negotiability, but still be held by the original owner. 
B)  meet the requirements of negotiability and be acquired by a party who notified the maker or drawer of the transfer. 
C)  simply be acquired by a holder in due course. 
D)  meet the requirements of negotiability  and  be acquired by a holder in due course.

Question 6

A definite time required for negotiability would NOT be satisfied in which instance?

Accepted Answer

A)  Payable on or before January 2, 2021. 
B)  Payable one year from the completion of the building 
C)  Payable one week after demand is made. 
D)  Payable on June 15, 2021 or, if the building is not complete on that date, one year from that date.

Question 7

The drawee is the individual who signs a check and promises to pay.

Accepted Answer

A) True 
 B)False

Question 8

Elmore purchases goods from Grady, and Elmore executes and delivers a negotiable note to Grady for $1,200, payable to Grady's order in 30 days. Two weeks later, Grady negotiates the note to McDaniel. Which of the following is true?

Accepted Answer

A)  McDaniel is required to notify Elmore that he acquired the note. 
B)  If the goods are defective, Elmore's defense will necessarily be available against McDaniel. 
C)  Whether Elmore's defense is available against McDaniel will depend on whether McDaniel acquired the note in good faith and for value, had no knowledge of the defense, and took the note without reason to question its authenticity. 
D)  McDaniel can acquire no greater rights than Grady had in the note.

Question 9

If Sam writes a check drawn on his account at First Bank to State University to pay his tuition:

Accepted Answer

A)  Sam is the drawer. 
B)  the university is the drawee. 
C)  the bank is the payee. 
D)  Sam is the maker.

Question 10

Carlos wrote a check with the numbers $4500 and the written amount as forty-five dollars. Explain how the ambiguity will be resolved.

Accepted Answer

The answer of Carlos wrote a check with the numbers...

Question 11

A promise or order is payable at a definite time if it is payable:

Accepted Answer

A)  at a time readily ascertainable at the time the promise or order is issued. 
B)  at a fixed date or dates. 
C)  at a definite period of time after sight or acceptance. 
D)  All of these.

Question 12

X signs a negotiable instrument ordering Y to pay Z the sum of $500. Y is the:

Accepted Answer

A)  maker. 
B)  drawee. 
C)  payee. 
D)  drawer.

Question 13

Negotiability is wholly a matter of form.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would be a bearer instrument?

Accepted Answer

A)  A check payable to "cash." 
B)  A check that says "pay to the order of John Jones." 
C)  A check that says "pay to the order of bearer." 
D)  A check payable to "cash" or a   check that says "pay to the order of bearer."

Question 15

A provision in a promissory note payable one year from its date that the maker may extend the maturity date six months impairs the note's negotiability.

Accepted Answer

A) True 
 B)False

Question 16

Only a bank may serve as the maker of a certificate of a deposit.

Accepted Answer

A) True 
 B)False

Question 17

To be negotiable, the instrument must satisfy all except which one of the following requirements?

Accepted Answer

A)  It must contain a promise or order to pay. 
B)  It must be for a certain amount. 
C)  It must be payable on demand. 
D)  It must be signed.

Question 18

In the development of the law of negotiable instruments, which of the following was not a step?

Accepted Answer

A)  Centuries ago, contract rights to the payment of money were not assignable because the contractual promise ran to the promisee. 
B)  Contractual rights became assignable to third parties. 
C)  The law of assignments changed to permit assignees to obtain greater rights than their assignors. 
D)  The concept of a holder in due course developed, which allowed certain good faith transferees who gave value to acquire the right to be paid, free of most of the defenses to which an assignee would be subject.

Question 19

References to other agreements in negotiable instruments:

Accepted Answer

A)  destroy negotiability unless the recital makes the instrument subject to, or governed by, the terms of another agreement. 
B)  do not destroy negotiability in any circumstances. 
C)  do not destroy negotiability unless the recital makes the instrument subject to or governed by the terms of another agreement. 
D)  destroy negotiability in all circumstances.

Question 20

Bill's car broke down on a dark, rainy night. Along came Andy in his service station's four-wheel drive truck with tools and supplies in the back. Bill didn't have any credit cards and only $3.25 cash, so Andy told him to write a check or an IOU. Neither Andy nor Bill had any paper, so Bill wrote on the cover of Andy's lunchbox: "If my car is fixed right by Andy Walcott, I will pay him $150. (Signed) Bill Boyd." Andy indorses the note and takes it to a commercial factor for negotiation. The factor refuses, saying it is non-negotiable because it:

Accepted Answer

A)  is written on a lunchbox. 
B)  is conditional on satisfactory repair of the car. 
C)  mentions the existence of a contract to repair the car. 
D)  was written in a situation of duress.

Exam 24: Form and Content

Which of the following would not be negotiable?

A cashier's check is a check drawn by a bank upon itself to the order of a named payee.

Reed signed and delivered a negotiable promissory note payable to Anne. Anne negotiated the note to Rodrigo. Rodrigo now has the same legal status as an assignee of a contract.

Form of the document has no effect on negotiability, as long as the information is correct.

To have the full benefit of negotiability, negotiable instruments must:

A definite time required for negotiability would NOT be satisfied in which instance?

The drawee is the individual who signs a check and promises to pay.

Elmore purchases goods from Grady, and Elmore executes and delivers a negotiable note to Grady for $1,200, payable to Grady's order in 30 days. Two weeks later, Grady negotiates the note to McDaniel. Which of the following is true?

If Sam writes a check drawn on his account at First Bank to State University to pay his tuition:

Carlos wrote a check with the numbers $4500 and the written amount as forty-five dollars. Explain how the ambiguity will be resolved.

A promise or order is payable at a definite time if it is payable:

X signs a negotiable instrument ordering Y to pay Z the sum of $500. Y is the:

Negotiability is wholly a matter of form.

Which of the following would be a bearer instrument?

A provision in a promissory note payable one year from its date that the maker may extend the maturity date six months impairs the note's negotiability.

Only a bank may serve as the maker of a certificate of a deposit.

To be negotiable, the instrument must satisfy all except which one of the following requirements?

In the development of the law of negotiable instruments, which of the following was not a step?

References to other agreements in negotiable instruments: