Question 1

Who is primarily liable for a cashier's check?

Accepted Answer

A)  The individual who orders the cashier's check and from whose account the payment is drawn.
B)  The endorser of cashier's check.
C)  No entity is primarily liable on a cashier's check.
D)  The individual who orders the check is primarily liable;the bank is secondarily liable.
E)  The bank that issues the cashier's check,as the bank is the maker of the check.F) B) and D)
G) C) and E)

Question 2

If Garren properly presents the note to Dexter and Dexter simply writes "dishonor" on the note,is there a proper notice of dishonor?

Accepted Answer

A)  No,because the notice does not identify the instrument in question.
B)  Yes,because if the word "dishonor" on the instrument is sufficient to constitute notice.
C)  No,unless Garren specifically states that he is dishonoring the note.
D)  No,because simply writing "dishonor" is insufficient to constitute notice.
E)  No,because Garren did not sign his name.F) D) and E)
G) A) and D)

Question 3

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Accepted Answer

A)  A party who has secondary liability.
B)  A party who has maker liability.
C)  A party who has acceptor liability.
D)  A party who has recognition liability.
E)  A party who has transfer liability.F) D) and E)
G) A) and C)

Question 4

Which of the following results in liability for the principal because the principal approved of an unauthorized agent's signature?

Accepted Answer

A)  Acknowledgement
B)  Pre-approval
C)  Ratification
D)  Post-approval
E)  AuthorizationF) D) and E)
G) C) and E)

Question 5

Serayah received a check written by Sam whom she did not really trust.Accordingly,she rushed to his bank to get the check cashed.The bank told her that presentment would be considered as being made on the next business day and refused to immediately give her the funds.The bank representative told her that the bank's cut-off hour was 2:00 p.m.and that she did not present the check until 3:00 p.m.Serayah was upset and told the bank that it wrongfully dishonored the check in violation of provisions of the UCC.Discuss the rights of the parties.

Accepted Answer

A bank to which presentment is made may ...

Question 6

Which of the following is true regarding Floyd's entitlement to payment from Hema?

Accepted Answer

A)  Floyd is only entitled to payment from Hema because Anne dishonored the payment.
B)  Floyd is never entitled payment from Hema because he must seek recovery only from Anne.
C)  Floyd is not entitled to payment from Hema unless Rahul,in addition to Anne,dishonors the instrument.
D)  Floyd is entitled to recover on the note from Hema only if both Anne and Rahul have filed bankruptcy or are otherwise proven insolvent.
E)  Floyd is entitled to recover on the note from Hema.F) A) and B)
G) D) and E)

Question 7

A bank is primarily liable for the amount of a check when it accepts the check.

Accepted Answer

A) True 
 B)False

Question 8

What is the name of the party that signs an instrument to restrict payment of it,negotiate it,or incur liability?

Accepted Answer

A)  Endorser
B)  Acceptor
C)  Drawer
D)  Promisor
E)  MakerF) B) and C)
G) A) and B)

Question 9

When a holder presents an instrument in a timely and proper manner,but acceptance or payment is refused,the instrument has been ________.

Accepted Answer

A)  Rejected
B)  Converted
C)  Dishonored
D)  Refused
E)  DestroyedF) B) and E)
G) C) and D)

Question 10

A bank's refusal to pay an instrument signifies that the instrument has been dishonored.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not a real defense to enforcement of a negotiable instrument?

Accepted Answer

A)  Infancy being below the legal age of consent) ,to the extent that it makes a contract void
B)  Impairment of collateral
C)  Discharge through insolvency proceedings bankruptcy) 
D)  Forgery
E)  Fraud in the factumF) A) and B)
G) C) and D)

Question 12

If,instead of endorsing the note to Tonya,Felicia had wanted to demand payment on the note from Branson,could Branson be held liable since he did not sign his name?

Accepted Answer

A)  Yes,the "X" could constitute a signature,but only if Branson also printed his name on the note.
B)  No,because the "X" does not constitute a signature because it does not identify the endorser.
C)  No,a signature is required to hold a party liable for a negotiable instrument.
D)  Yes,because the "X" Branson wrote on the instrument could constitute a signature if Branson used it with the intent to authenticate the instrument.
E)  No,public policy would not support holding a party liable for payment if that party did not actually sign the instrument.F) B) and E)
G) A) and E)

Question 13

Which of the following occurs when a former holder of an instrument has the instrument transferred back to him or her by negotiation or other means?

Accepted Answer

A)  Reacquisition
B)  Release
C)  Renunciation
D)  Cancellation
E)  RecourseF) A) and D)
G) C) and E)

Question 14

[The Furniture Shop] Chloe writes a check for some furniture to The Furniture Shop,a small specialty furniture shop whose shares are owned primarily by Rabia.Rabia decided to go on an extended European vacation and temporarily closed down the shop the day after Chloe wrote the check.When Rabia returned,she had a number of other things to do and did not take Chloe's check and some other checks to the bank for three months.Rabia was independently wealthy and only ran the shop as a hobby,so she had not been in need of funds.When Rabia finally took Chloe's check to the bank,Rabia requested that her bank,ABC Bank,deposit the check into her account.When ABC Bank,however,requested payment from Chloe's bank,XYZ Bank,the check was dishonored because of insufficient funds in Chloe's account.Although Rabia did not particularly need the funds,she did not like to feel as if she had been cheated;therefore,she demanded that Chloe make the check good.
-Who is the drawer of the check Chloe presented to Rabia at The Furniture Shop?

Accepted Answer

A)  The Furniture Shop
B)  Rabia,as primary owner of The Furniture Shop
C)  Chloe
D)  Chloe's bank.
E)  Rabia's bank.F) A) and E)
G) A) and B)

Question 15

Did Dexter dishonor the promissory note?

Accepted Answer

A)  No,Garren only told Dexter about the promissory note and never exhibited the promissory note to Dexter,therefore there was no presentment and Dexter did not dishonor the note.
B)  Yes.
C)  No,Garren did not present the note in a timely manner,therefore Dexter did not dishonor the note.
D)  No,Garren was not a proper party,therefore Dexter did not dishonor the note.
E)  No,although Garren met the requirements for presentment and Dexter refused to pay,he did not explicitly dishonor the note.F) A) and C)
G) B) and E)

Question 16

A party who signs a negotiable instrument without knowing that it is,in fact,a negotiable instrument,can claim fraud in the execution as a defense.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following was the result on appeal in Heartland State Bank v.American Bank & Trust,the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Accepted Answer

A)  That the defending bank had no right to return the check because by accepting the check,it became accountable for it.
B)  That the bank had no right to return the check because the check was written by one of its customers.
C)  That the defending bank had until midnight on April 10 to return the check and that it,therefore,did not act in a timely manner.
D)  That the defending bank had until midnight on April 11 to return the check and that it,therefore,acted in a timely manner in doing so.
E)  That the defending bank had no right to return the check because the check had already gone through the Federal Reserve System.F) B) and D)
G) A) and E)

Question 18

The most common reason that improper presentment occurs is the failure to present an instrument on time.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account,but the principal does nothing until two months later after the agent leaves town with the funds?

Accepted Answer

A)  The principal can receive reimbursement from makers of the checks only.
B)  Because the checks were forged,the principal can receive reimbursement of the funds from any maker involved or any bank that cashed the checks.
C)  The principal can recover from either the makers or any banks who cashed the checks only if it can be shown that the agent cannot be located for criminal prosecution.
D)  The principal can receive reimbursement from any bank that cashed the checks only.
E)  It is likely that it will be determined that the principal ratified the signatures and that the principal cannot recover from either makers or banks that cashed the checks.F) A) and E)
G) B) and D)

Question 20

If the party that dishonors an instrument is a collecting bank,when must notice of the dishonor be given to a secondarily liable party by the collecting bank?

Accepted Answer

A)  Within 10 days
B)  Within 30 days
C)  Before midnight of the next day
D)  Within 7 days
E)  Within 48 hoursF) B) and C)
G) B) and D)

Exam 28: Liability, defenses, and Discharge

If the party that dishonors an instrument is a collecting bank,when must notice of the dishonor be given to a secondarily liable party by the collecting bank?

Correct Answer
verified

When a holder presents an instrument in a timely and proper manner,but acceptance or payment is refused,the instrument has been ________.

Correct Answer
verified

What is the name of the party that signs an instrument to restrict payment of it,negotiate it,or incur liability?

Correct Answer
verified

Which of the following is true regarding Floyd's entitlement to payment from Hema?

Correct Answer
verified

A bank's refusal to pay an instrument signifies that the instrument has been dishonored.

Correct Answer
verified

Correct Answer
verified
A bank to which presentment is made may ...
View Answer

Correct Answer
verified

Which of the following is not a real defense to enforcement of a negotiable instrument?

Correct Answer
verified

If,instead of endorsing the note to Tonya,Felicia had wanted to demand payment on the note from Branson,could Branson be held liable since he did not sign his name?

Correct Answer
verified

A party who signs a negotiable instrument without knowing that it is,in fact,a negotiable instrument,can claim fraud in the execution as a defense.

Correct Answer
verified

Did Dexter dishonor the promissory note?

Correct Answer
verified

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account,but the principal does nothing until two months later after the agent leaves town with the funds?

Correct Answer
verified

Which of the following occurs when a former holder of an instrument has the instrument transferred back to him or her by negotiation or other means?

Correct Answer
verified

Which of the following results in liability for the principal because the principal approved of an unauthorized agent's signature?

Correct Answer
verified

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Correct Answer
verified

A bank is primarily liable for the amount of a check when it accepts the check.

Correct Answer
verified

Which of the following was the result on appeal in Heartland State Bank v.American Bank & Trust,the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Correct Answer
verified

Who is primarily liable for a cashier's check?

Correct Answer
verified

If Garren properly presents the note to Dexter and Dexter simply writes "dishonor" on the note,is there a proper notice of dishonor?

Correct Answer
verified

The most common reason that improper presentment occurs is the failure to present an instrument on time.

Correct Answer
verified

Exam 28: Liability, defenses, and Discharge

If the party that dishonors an instrument is a collecting bank,when must notice of the dishonor be given to a secondarily liable party by the collecting bank?

Correct AnswerverifiedShow Answer

When a holder presents an instrument in a timely and proper manner,but acceptance or payment is refused,the instrument has been ________.

Correct AnswerverifiedShow Answer

What is the name of the party that signs an instrument to restrict payment of it,negotiate it,or incur liability?

Correct AnswerverifiedShow Answer

Which of the following is true regarding Floyd's entitlement to payment from Hema?

Correct AnswerverifiedShow Answer

A bank's refusal to pay an instrument signifies that the instrument has been dishonored.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA bank to which presentment is made may ...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following is not a real defense to enforcement of a negotiable instrument?

Correct AnswerverifiedShow Answer

If,instead of endorsing the note to Tonya,Felicia had wanted to demand payment on the note from Branson,could Branson be held liable since he did not sign his name?

Correct AnswerverifiedShow Answer

A party who signs a negotiable instrument without knowing that it is,in fact,a negotiable instrument,can claim fraud in the execution as a defense.

Correct AnswerverifiedShow Answer

Did Dexter dishonor the promissory note?

Correct AnswerverifiedShow Answer

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account,but the principal does nothing until two months later after the agent leaves town with the funds?

Correct AnswerverifiedShow Answer

Which of the following occurs when a former holder of an instrument has the instrument transferred back to him or her by negotiation or other means?

Correct AnswerverifiedShow Answer

Which of the following results in liability for the principal because the principal approved of an unauthorized agent's signature?

Correct AnswerverifiedShow Answer

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Correct AnswerverifiedShow Answer

A bank is primarily liable for the amount of a check when it accepts the check.

Correct AnswerverifiedShow Answer

Which of the following was the result on appeal in Heartland State Bank v.American Bank & Trust,the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Correct AnswerverifiedShow Answer

Who is primarily liable for a cashier's check?

Correct AnswerverifiedShow Answer

If Garren properly presents the note to Dexter and Dexter simply writes "dishonor" on the note,is there a proper notice of dishonor?

Correct AnswerverifiedShow Answer

The most common reason that improper presentment occurs is the failure to present an instrument on time.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
A bank to which presentment is made may ...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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