Question 1

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

Accepted Answer

A)  Bearer;bearer
B)  Order;order
C)  Order;bearer
D)  Transactional;bearer
E)  Order;transactionalF) A) and B)
G) B) and D)

Question 2

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?

Accepted Answer

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.F) A) and B)
G) All of the above

Question 3

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

Accepted Answer

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.F) C) and E)
G) None of the above

Question 4

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

Accepted Answer

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.F) A) and B)
G) A) and E)

Question 5

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

Accepted Answer

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

Question 6

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

Accepted Answer

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.F) D) and E)
G) A) and E)

Question 7

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.

Accepted Answer

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

Question 8

Which statement is true regarding negotiation of an instrument?

Accepted Answer

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.F) A) and B)
G) All of the above

Question 9

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

Accepted Answer

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.F) A) and E)
G) A) and D) C

Question 10

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

Accepted Answer

A)  Demand
B)  Recourse
C)  Time
D)  Nonrecourse
E)  ImmediateF) B) and C)
G) A) and E)

Question 11

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

Accepted Answer

A)  Order
B)  Transactional
C)  Payor
D)  Demand
E)  BearerF) A) and B)
G) A) and C)

Question 12

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?

Accepted Answer

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.F) A) and B)
G) A) and C)

Question 13

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

Accepted Answer

A)  Demand;order
B)  Demand;time
C)  Order;bearer
D)  Time;demand
E)  Time;orderF) A) and B)
G) All of the above

Question 14

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

Accepted Answer

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 currencyF) A) and B)
G) D) and E) B

Question 15

[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)  Drawer
B)  Payee
C)  Owner
D)  Payor
E)  DraweeF) A) and B)
G) A) and C)

Question 16

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?

Accepted Answer

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.F) A) and C)
G) A) and B)

Question 17

What are the two exceptions to the time-certain requirement for negotiability discussed in the text?

Accepted Answer

First,an instrument that permits acceler...

Question 18

What does the banking term "float" reference?

Accepted Answer

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.F) A) and D)
G) C) and D)

Question 19

Which of the following is not a negotiable instrument?

Accepted Answer

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

Question 20

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 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 instrumentF) C) and E)
G) A) and E)

Exam 26: Negotiable Instruments: Negotiability and Transferability

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

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

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

Correct Answer
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A is a two-party instrument and a is a third-party instrument.

Correct Answer
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B

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

Correct Answer
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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.

Correct Answer
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Which statement is true regarding negotiation of an instrument?

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

Correct Answer
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C

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

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

Correct Answer
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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?

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

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

Correct Answer
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B

[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?

Correct Answer
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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?

Correct Answer
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What are the two exceptions to the time-certain requirement for negotiability discussed in the text?

Correct Answer
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First,an instrument that permits acceler...
View Answer

What does the banking term "float" reference?

Correct Answer
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Which of the following is not a negotiable instrument?

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

Correct Answer
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Exam 26: Negotiable Instruments: Negotiability and Transferability

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which statement is true regarding negotiation of an instrument?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedC

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

[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?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

What are the two exceptions to the time-certain requirement for negotiability discussed in the text?

Correct AnswerverifiedFirst,an instrument that permits acceler...View AnswerShow Answer

What does the banking term "float" reference?

Correct AnswerverifiedShow Answer

Which of the following is not a negotiable instrument?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct Answer
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A is a two-party instrument and a is a third-party instrument.

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B

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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.

Correct Answer
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Correct Answer
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Correct Answer
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C

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

Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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First,an instrument that permits acceler...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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