Question 1

For negotiation,which of the following types of paper require only delivery of the instrument to the holder by the payee?

Accepted Answer

A)   Bearer
B)   Delivery
C)   Order
D)   Transfer
E)   AcknowledgementF) C) and D)
G) A) and C)

Question 2

An instrument that reads,"Pay to the order of Jones or Green," is payable to _________ payees.

Accepted Answer

A)   Joint
B)   Concurrent
C)   Consecutive
D)   Alternative
E)   AlternateF) All of the above
G) D) and E)

Question 3

The words,"Pay to Allan Smith" followed by the endorser's signature create a(n) ______ endorsement.

Accepted Answer

A)   Blank
B)   Allonge
C)   Qualified
D)   Special
E)   SpecificF) B) and E)
G) B) and D)

Question 4

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Accepted Answer

A)   An acknowledged instrument.
B)   A contract instrument.
C)   A negotiable instrument.
D)   A holder instrument.
E)   A delivered instrument.F) None of the above
G) C) and E)

Question 5

Which of the following is the term for a person creating an endorsement?

Accepted Answer

A)   An allonge
B)   A transferor
C)   A transferee
D)   An endorser
E)   An endorseeF) B) and D)
G) B) and C)

Question 6

An instrument is dishonored when a party refuses to pay the instrument such as when a bank refuses to pay because insufficient funds exist.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following did the court determine on appeal in Wawel Savings Bank v.Jersey Tractor Trailer Training Inc.,the case in the text in which a lender who perfected an interest in a debtor's collateral claimed to have priority in bankruptcy over an entity who later entered into an agreement whereby it purchased rights to the debtor's accounts receivables?

Accepted Answer

A)   Under the "first in time" rule, the court ruled in favor of the lender who perfected the interest in the debtor's collateral.
B)   Under the "first to file" rule, the court ruled in favor of the lender who perfected the interest in the debtor's collateral.
C)   The court ruled in favor of the purchaser of receivables on the basis that the agreement the lender had with the debtor did not expressly prohibit the sale of receivables.
D)   The court ruled in favor of the purchaser of receivables on the basis that an immediate transaction for value was involved.
E)   The court remanded the case for a determination as to whether the purchaser of receivables was a holder in due course or a purchaser of instruments in which case it would prevail.F) C) and D)
G) B) and C)

Question 8

Barry is sending his brother-in-law and agent,Richard,who he does not particularly trust,to deposit into Barry's business bank account a check belonging to Barry.What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Accepted Answer

Barry should sign the back of ...

Question 9

Order paper must be ______ as well as _____ to be negotiated.

Accepted Answer

A)   Stamped with an allonge; delivered
B)   Delivered; transferred
C)   Transferred; delivered
D)   Negotiated; held
E)   Endorsed; deliveredF) A) and E)
G) All of the above

Question 10

What is the effect of an unqualified,blank endorsement?

Accepted Answer

A)   It turns previous order paper into bearer paper.
B)   It turns previous bearer paper into order paper.
C)   It turns a blank endorsement into a special endorsement.
D)   It turns an allonge into an endorsement.
E)   It turns an endorsement into an allonge.F) A) and B)
G) B) and E)

Question 11

Susan purchased a refrigerator from ABC Appliance store for $800.She takes the refrigerator home and discovers that it is defective.She calls ABC Appliance store and tells them that she would like to return the refrigerator.ABC Appliance store tells her that they have assigned the promissory note she provided the store in order to purchase the refrigerator to a finance company and that the finance company,as a holder in due course,is not subject to defenses.Which of the following is true regarding the rights of parties?

Accepted Answer

A)   The finance company is subject to the defenses of Susan because of the Federal Trade Commission rule created to protect consumers.
B)   ABC Appliance store is correct in that Susan cannot assert her defenses against the finance company.
C)   Susan can assert her defenses against the finance company only if she can prove that the finance company had knowledge that ABC Appliance store sold defective equipment from time to time.
D)   Susan can assert her defenses against the finance company only because she gave notice of the problem within 5 days of the sale.
E)   Susan can assert her defenses against the finance company only if she agrees to arbitrate the dispute.F) B) and D)
G) B) and E)

Question 12

Set forth the five conditions under which a holder may take an instrument for value.

Accepted Answer

A holder may take an instrument for valu...

Question 13

Which of the following is the payee's or last endorsee's signature and nothing else?

Accepted Answer

A)   A special endorsement.
B)   An allonge.
C)   A blank endorsement.
D)   A qualified endorsement.
E)   A restricted endorsement.F) A) and B)
G) A) and D)

Question 14

In the event of a misspelled name,how may the holder endorse the document?

Accepted Answer

A)   Only with the misspelled name.
B)   Only with the holder's actual name or the misspelled name.
C)   Only with the misspelled name followed by the actual name.
D)   With the holder's actual name, with the misspelled name, or with the misspelled name followed by the actual name.
E)   Endorsement is impossible in such a situation.F) A) and B)
G) A) and C)

Question 15

If there is no room on an instrument for an endorsement or if all the room has been taken by previous endorsements,a(n) ______ may be attached.

Accepted Answer

A)   Acknowledgement
B)   Blank endorsement
C)   Special endorsement
D)   Allonge
E)   CodicilF) C) and D)
G) All of the above

Question 16

Which of the following is true regarding Sam's rights in relation to the check?

Accepted Answer

A)   As a holder, Sam may demand payment from either Susie, Annie, or Mary.
B)   As a holder in due course, Sam may demand payment from either Susie, Annie, or Mary.
C)   As a holder, Sam may demand payment from either Susie or Annie, but not Mary.
D)   As a holder in due course, Sam may demand payment from either Susie or Annie, but not Mary.
E)   Sam may not demand payment from either Susie, Annie, or Mary.F) A) and E)
G) C) and D)

Question 17

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

Accepted Answer

A)   Conditional endorsement.
B)   Trust endorsement.
C)   Endorsement to prohibit further endorsement.
D)   Bearer endorsement.
E)   Conditional bearer endorsement.F) A) and B)
G) B) and D)

Question 18

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Accepted Answer

A) True 
 B)False

Question 19

Receiving an instrument as a gift satisfies the requirement of taking an instrument for value.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following results in an endorsement is considered qualified?

Accepted Answer

A)   A special endorsement.
B)   Restricted endorsement.
C)   Addition of the words, "without recourse."
D)   Addition of the words, "conditional entrustment."
E)   Addition of the words, "trust endorsement."F) A) and E)
G) A) and B)

Exam 27: Negotiation, Holder in Due Course, and Defenses

Barry is sending his brother-in-law and agent,Richard,who he does not particularly trust,to deposit into Barry's business bank account a check belonging to Barry.What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Correct Answer
verified
Barry should sign the back of ...
View Answer

Which of the following is true regarding Sam's rights in relation to the check?

Correct Answer
verified

If there is no room on an instrument for an endorsement or if all the room has been taken by previous endorsements,a(n) ______ may be attached.

Correct Answer
verified

Which of the following is the term for a person creating an endorsement?

Correct Answer
verified

Which of the following results in an endorsement is considered qualified?

Correct Answer
verified

An instrument that reads,"Pay to the order of Jones or Green," is payable to _________ payees.

Correct Answer
verified

Set forth the five conditions under which a holder may take an instrument for value.

Correct Answer
verified
A holder may take an instrument for valu...
View Answer

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

Correct Answer
verified

Correct Answer
verified

In the event of a misspelled name,how may the holder endorse the document?

Correct Answer
verified

The words,"Pay to Allan Smith" followed by the endorser's signature create a(n) ______ endorsement.

Correct Answer
verified

Which of the following is the payee's or last endorsee's signature and nothing else?

Correct Answer
verified

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Correct Answer
verified

For negotiation,which of the following types of paper require only delivery of the instrument to the holder by the payee?

Correct Answer
verified

What is the effect of an unqualified,blank endorsement?

Correct Answer
verified

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Correct Answer
verified

An instrument is dishonored when a party refuses to pay the instrument such as when a bank refuses to pay because insufficient funds exist.

Correct Answer
verified

Order paper must be __ as well as _ to be negotiated.

Correct Answer
verified

Receiving an instrument as a gift satisfies the requirement of taking an instrument for value.

Correct Answer
verified

Correct Answer
verified

Exam 27: Negotiation, Holder in Due Course, and Defenses

Barry is sending his brother-in-law and agent,Richard,who he does not particularly trust,to deposit into Barry's business bank account a check belonging to Barry.What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Correct AnswerverifiedBarry should sign the back of ...View AnswerShow Answer

Which of the following is true regarding Sam's rights in relation to the check?

Correct AnswerverifiedShow Answer

If there is no room on an instrument for an endorsement or if all the room has been taken by previous endorsements,a(n) ______ may be attached.

Correct AnswerverifiedShow Answer

Which of the following is the term for a person creating an endorsement?

Correct AnswerverifiedShow Answer

Which of the following results in an endorsement is considered qualified?

Correct AnswerverifiedShow Answer

An instrument that reads,"Pay to the order of Jones or Green," is payable to _________ payees.

Correct AnswerverifiedShow Answer

Set forth the five conditions under which a holder may take an instrument for value.

Correct AnswerverifiedA holder may take an instrument for valu...View AnswerShow Answer

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the event of a misspelled name,how may the holder endorse the document?

Correct AnswerverifiedShow Answer

The words,"Pay to Allan Smith" followed by the endorser's signature create a(n) ______ endorsement.

Correct AnswerverifiedShow Answer

Which of the following is the payee's or last endorsee's signature and nothing else?

Correct AnswerverifiedShow Answer

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Correct AnswerverifiedShow Answer

For negotiation,which of the following types of paper require only delivery of the instrument to the holder by the payee?

Correct AnswerverifiedShow Answer

What is the effect of an unqualified,blank endorsement?

Correct AnswerverifiedShow Answer

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Correct AnswerverifiedShow Answer

An instrument is dishonored when a party refuses to pay the instrument such as when a bank refuses to pay because insufficient funds exist.

Correct AnswerverifiedShow Answer

Order paper must be ______ as well as _____ to be negotiated.

Correct AnswerverifiedShow Answer

Receiving an instrument as a gift satisfies the requirement of taking an instrument for value.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
Barry should sign the back of ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A holder may take an instrument for valu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Order paper must be __ as well as _ to be negotiated.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified