Question 1

An "X" or a thumbprint could constitute a signature within the meaning of the term in the Code.

Accepted Answer

A) True 
 B)False

Question 2

What are the requirements of negotiability under the Code? List and briefly summarize them.

Accepted Answer

The answer of What are the requirements of negotiability under...

Question 3

Distinguish between a note and a certificate of deposit. How are they alike? How are they different? Explain your answer.

Accepted Answer

The answer of Distinguish between a note and a certificate...

Question 4

Negotiable instruments:

Accepted Answer

A)  include drafts, promissory notes, assignments, and certificates of deposit. 
B)  are used primarily for smaller transactions. 
C)  in the form of checks have decreased in use since 2000. 
D)  have increased in usage to the point where they are now approximately equal to usage of cash for payments.

Question 5

Which of the following is not a negotiable instrument?

Accepted Answer

A)  A check. 
B)  A draft. 
C)  A certificate of deposit. 
D)  A stock certificate.

Question 6

Expain whether each of the following would be negotiable or not negotiable. 
a. A check with the amount payable omitted. 
b. A draft for 3,000 bushels of corn. 
c. A check written in pencil on a paper towel. 
d. A note stating that it is secured by a mortgage on a specified parcel of land. 
e. A note stating "IOU fifty dollars."

Accepted Answer

The answer of Expain whether each of the following would...

Question 7

To be negotiable, an instrument must be in writing.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following will destroy negotiability?

Accepted Answer

A)  Making the instrument subject to the terms of another agreement. 
B)  Making the instrument payable in Japanese yen. 
C)  Signing a check in pencil. 
D)  Signing a check with an "X."

Question 9

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 10

Which of the following notes would not be negotiable? A written, signed promise to pay:

Accepted Answer

A)  $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)  $500 and a rick of firewood on or before September 10. 
C)  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)  All of these.

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

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 13

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

Accepted Answer

A) True 
 B)False

Question 14

A promise or order is unconditional unless it states that:

Accepted Answer

A)  there is an express condition to payment. 
B)  the promise or order is subject to or governed by another writing. 
C)  rights or obligations concerning the order or promise are stated in another writing. 
D)  All of these.

Question 15

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)  None of these.

Question 16

Which of the following has been held to destroy the negotiability of an instrument and to render its transfer a contractual assignment?

Accepted Answer

A)  "I wish you would pay." 
B)  "Pay to the order of John Jones." 
C)  "Pay bearer." 
D)  None of these.

Question 17

Explain the effect that a reference to other agreements has on negotiable instruments and the difference between a mere reference and a negotiable instrument's being subject to the terms of another agreement.

Accepted Answer

The answer of Explain the effect that a reference to...

Question 18

A __________ is a specialized form of promise to pay money given by a maker in which the bank is the maker.

Accepted Answer

A)  note 
B)  certificate of deposit 
C)  trade acceptance 
D)  cashier's check

Question 19

A certificate of deposit differs from a promissory note in that:

Accepted Answer

A)  the maker is always a bank. 
B)  there are three parties to the transaction. 
C)  the payee of a CD must be paid on demand. 
D)  Both the maker is always a bank  and the payee of a CD must be paid on demand .

Question 20

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.

Accepted Answer

A) True 
 B)False

Exam 24: Form and Content

An "X" or a thumbprint could constitute a signature within the meaning of the term in the Code.

What are the requirements of negotiability under the Code? List and briefly summarize them.

Distinguish between a note and a certificate of deposit. How are they alike? How are they different? Explain your answer.

Negotiable instruments:

Which of the following is not a negotiable instrument?

To be negotiable, an instrument must be in writing.

Which of the following will destroy negotiability?

Which of the following would be a bearer instrument?

Which of the following notes would not be negotiable? A written, signed promise to pay:

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

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?

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

A promise or order is unconditional unless it states that:

References to other agreements in negotiable instruments:

Which of the following has been held to destroy the negotiability of an instrument and to render its transfer a contractual assignment?

Explain the effect that a reference to other agreements has on negotiable instruments and the difference between a mere reference and a negotiable instrument's being subject to the terms of another agreement.

A __________ is a specialized form of promise to pay money given by a maker in which the bank is the maker.

A certificate of deposit differs from a promissory note in that:

Paper payable "on demand" fails the test of negotiability in that it does not contain a specific time.