Question 1

Book Payment.Molly and Pat signed a contract providing that "Pat will furnish the correct used business law book for use in Molly's business law class; and in return,on August 15,2017,Molly promises to pay Pat $50 for the book." Molly took the book and planned to pay Pat.Meanwhile,Pat properly assigned the contract Molly had signed to Jack.When Molly went to class,however,she discovered that the book was the incorrect book.When Jack asked Molly for payment,Molly refused.Molly told Jack that the book was useless to her and that she was not paying either him or Pat anything for it.Jack told Molly that he had an enforceable assignment in the form of a negotiable instrument and that he could collect regardless of whether the book was useless.Molly did not believe him.Continuing with her attempt to save money on books,Molly agreed to buy Tim's United States history book for $40.She had an oral agreement with Tim that he would give her the book and that she would pay him in three days.This time Molly got the right book.Tim,in writing,properly assigned the right to the $40 payment to Richard.Richard asked Molly for the money.Molly admitted her agreement with Tim but told Richard that she was not going to pay him because he did not have a negotiable instrument.Molly also purchased a communications book from Sam promising in writing to give him in return the next day,to his order,a used DVD player she owned.Which of the following is true regarding Jack's claim that he had a negotiable instrument and could collect from Molly?

Accepted Answer

A)  Jack is correct.
B)  The document is not negotiable because it does not contain words of negotiability or words indicating it is a bearer instrument.
C)  The document is not negotiable because the book was the wrong book.
D)  The document is not negotiable because Jack was not a party to the original contract.
E)  The document is not negotiable because it does not contain words of negotiability or words indicating it is a bearer instrument,and because Molly received the wrong book.F) D) and E)
G) A) and E)

Question 2

List the requirements generally required for a check to be considered properly payable.

Accepted Answer

Under the properly payable rule,a bank h...

Question 3

According to the Uniform Commercial Code,which of the following are considered banks?

Accepted Answer

A)  Savings and loans
B)  Credit unions
C)  Trust companies
D)  Savings and loans,trust companies,and credit unions
E)  Savings and loans and credit unions,but not trust companiesF) B) and D)
G) All of the above

Question 4

According to the Uniform Commercial Code,money orders are considered promissory notes.

Accepted Answer

A) True 
 B)False

Question 5

If a check is not presented to a bank within ________ of its date,the check is considered a stale check.

Accepted Answer

A)  30 days
B)  90 days
C)  6 months
D)  9 months
E)  None of these because according to the Uniform Commercial Code,a bank cannot consider a check to be stale.F) A) and D)
G) A) and E)

Question 6

If an instrument fails to qualify as a negotiable instrument,it means that the instrument fails to be an enforceable contract.

Accepted Answer

A) True 
 B)False

Question 7

Anne orally promises Judy that in return for Judy washing Anne's dog,Anne unconditionally promises to pay Judy $50 the next Wednesday.Is a contract formed,and if so,is it negotiable?

Accepted Answer

Based on the facts presented,a contract ...

Question 8

Checks are payable ________.

Accepted Answer

A)  three business days after they are issued
B)  three calendar days after they are issued
C)  forty-eight hours after they are issued
D)  as soon as they are issued
E)  at a definite timeF) D) and E)
G) B) and E)

Question 9

The Uniform Commercial Code defines a negotiable instrument as a written document that is signed by the maker or drawer with an unconditional promise or order to pay a sum certain in money on demand or at a time certain to bearer or to order.

Accepted Answer

A) True 
 B)False

Question 10

________ is the transfer of possession of a negotiable instrument to a third party who becomes a holder of the negotiable instrument.

Accepted Answer

A)  Certification
B)  Negotiation
C)  Acknowledgement
D)  Referral
E)  ConsignmentF) A) and B)
G) B) and D)

Question 11

In the check collection process,the first bank that receives the check for payment is the ________ bank.

Accepted Answer

A)  payor
B)  payee
C)  depositary
D)  certifying
E)  acceptorF) A) and B)
G) A) and C)

Question 12

Used Car Commission.William promised to sell Helen's car for her,but he wanted a commission of 10%.Helen signed an instrument promising to pay William a 10% commission if he sold her car.William assigned the agreement to Phil.Helen's car was sold and the buyer paid Helen.A dispute ensued between Helen and William regarding whether William found the buyer or the buyer found Helen.When Phil asked Helen for payment on the instrument,Helen refused.William,Helen,and Phil settled their dispute without going to court,and Helen wrote Phil a check for $3,000.Phil endorsed the check on the back,planning to take it to the bank the next day.Unfortunately,Phil lost the check and it was found by Barry,who cashed it at the local bank.Barry then left town.Which of the following is the most likely result if Phil attempts to compel the bank to reimburse him for the value of the check cashed by Barry?

Accepted Answer

A)  The check was an order instrument,and the bank must absorb the loss because it should have only provided funds to Phil.
B)  Because the check was an order instrument,the bank was within its rights to pay Barry because he presented the check.Phil has no rights against the bank.
C)  Because the check was a bearer instrument,the bank must absorb the loss because it should only have provided the funds to Phil.
D)  Because the check was a bearer instrument,the bank was authorized to pay Barry.Phil has no rights against the bank.
E)  Regardless of what type of instrument the check was,the bank had no right to cash the check when it was presented by Barry unless the bank can establish by a preponderance of the evidence that Barry misrepresented himself as Phil's agent.F) A) and C)
G) A) and B)

Question 13

Who may endorse an instrument made payable to a legal entity such as a partnership?

Accepted Answer

A)  The president
B)  The chief executive officer
C)  The chief financial officer
D)  The treasurer
E)  Any authorized representativeF) B) and D)
G) A) and B)

Question 14

With a(n) ________ instrument,payment can be made only at a specific time designated in the future.

Accepted Answer

A)  time
B)  demand
C)  recourse
D)  non-recourse
E)  immediateF) A) and C)
G) B) and C)

Question 15

Instruments payable to "cash" are considered bearer instruments.

Accepted Answer

A) True 
 B)False

Question 16

In the case of multiple forgeries by the same wrongdoer,if a customer examines a bank statement and does not notify the bank of the first forgery within the time required by the Uniform Commercial Code,what is the effect on subsequent forgeries assuming the bank is not negligent?

Accepted Answer

A)  There is no effect,because each forgery stands on its own.
B)  The customer is barred from recovering on the subsequent forgeries.
C)  Despite the default time limitation imposed by the Uniform Commercial Code,the customer may recover on the subsequent forgeries if they are reported to the bank within 60 days after the customer receives the bank statement showing the first forgery.
D)  Despite the default time limitation imposed by the Uniform Commercial Code,the customer may recover on the subsequent forgeries if they are reported to the bank within 90 days after the customer receives the bank statement showing the first forgery.
E)  Despite the default time limitation imposed by the Uniform Commercial Code,the customer may recover on the subsequent forgeries if they are reported to the bank within 180 days after the customer receives the bank statement showing the first forgery.F) A) and D)
G) C) and D)

Question 17

An instrument "payable on demand" is one that ________.

Accepted Answer

A)  states that it is payable on demand or at sight,or otherwise indicates that it is payable at the will of the holder
B)  does not state any time of payment
C)  is payable within ten days after presentment
D)  states that it is payable on demand or at sight,or otherwise indicates that it is payable at the will of the holder; or does not state any time of payment
E)  states that it is payable on demand or at sight,or otherwise indicates that it is payable at the will of the holder; does not state any time of payment; or is payable within ten days after presentmentF) All of the above
G) C) and D)

Question 18

An order by a drawer to a drawee to pay a payee is known as a ________.

Accepted Answer

A)  note
B)  draft
C)  novation
D)  check
E)  certificate of depositF) All of the above
G) C) and D)

Question 19

Which of the following is false regarding certified checks?

Accepted Answer

A)  If a bank refuses to certify a check,the check is considered dishonored.
B)  Once a check is certified,funds of the customer are removed from his or her account and placed in the bank's certified check account.
C)  If a bank certifies a check,the drawer of the check is no longer liable for the amount of the check.
D)  If a bank certifies a check,the bank has become primarily liable for the check.
E)  A certified check is a check that is accepted at the bank at which it is drawn.F) D) and E)
G) None of the above

Question 20

Negotiation is the transfer of possession to a third party,who becomes the holder of the negotiable instrument.

Accepted Answer

A) True 
 B)False

Exam 17: Negotiable Instruments: Negotiability and Transferability

Correct Answer
verified

The Uniform Commercial Code defines a negotiable instrument as a written document that is signed by the maker or drawer with an unconditional promise or order to pay a sum certain in money on demand or at a time certain to bearer or to order.

Correct Answer
verified

According to the Uniform Commercial Code,money orders are considered promissory notes.

Correct Answer
verified

Which of the following is false regarding certified checks?

Correct Answer
verified

________ is the transfer of possession of a negotiable instrument to a third party who becomes a holder of the negotiable instrument.

Correct Answer
verified

Checks are payable ________.

Correct Answer
verified

An order by a drawer to a drawee to pay a payee is known as a ________.

Correct Answer
verified

Negotiation is the transfer of possession to a third party,who becomes the holder of the negotiable instrument.

Correct Answer
verified

List the requirements generally required for a check to be considered properly payable.

Correct Answer
verified
Under the properly payable rule,a bank h...
View Answer

According to the Uniform Commercial Code,which of the following are considered banks?

Correct Answer
verified

If an instrument fails to qualify as a negotiable instrument,it means that the instrument fails to be an enforceable contract.

Correct Answer
verified

Correct Answer
verified

With a(n) ________ instrument,payment can be made only at a specific time designated in the future.

Correct Answer
verified

Who may endorse an instrument made payable to a legal entity such as a partnership?

Correct Answer
verified

An instrument "payable on demand" is one that ________.

Correct Answer
verified

Anne orally promises Judy that in return for Judy washing Anne's dog,Anne unconditionally promises to pay Judy $50 the next Wednesday.Is a contract formed,and if so,is it negotiable?

Correct Answer
verified
Based on the facts presented,a contract ...
View Answer

Instruments payable to "cash" are considered bearer instruments.

Correct Answer
verified

In the case of multiple forgeries by the same wrongdoer,if a customer examines a bank statement and does not notify the bank of the first forgery within the time required by the Uniform Commercial Code,what is the effect on subsequent forgeries assuming the bank is not negligent?

Correct Answer
verified

If a check is not presented to a bank within ________ of its date,the check is considered a stale check.

Correct Answer
verified

In the check collection process,the first bank that receives the check for payment is the ________ bank.

Correct Answer
verified

Exam 17: Negotiable Instruments: Negotiability and Transferability

Correct AnswerverifiedShow Answer

The Uniform Commercial Code defines a negotiable instrument as a written document that is signed by the maker or drawer with an unconditional promise or order to pay a sum certain in money on demand or at a time certain to bearer or to order.

Correct AnswerverifiedShow Answer

According to the Uniform Commercial Code,money orders are considered promissory notes.

Correct AnswerverifiedShow Answer

Which of the following is false regarding certified checks?

Correct AnswerverifiedShow Answer

________ is the transfer of possession of a negotiable instrument to a third party who becomes a holder of the negotiable instrument.

Correct AnswerverifiedShow Answer

Checks are payable ________.

Correct AnswerverifiedShow Answer

An order by a drawer to a drawee to pay a payee is known as a ________.

Correct AnswerverifiedShow Answer

Negotiation is the transfer of possession to a third party,who becomes the holder of the negotiable instrument.

Correct AnswerverifiedShow Answer

List the requirements generally required for a check to be considered properly payable.

Correct AnswerverifiedUnder the properly payable rule,a bank h...View AnswerShow Answer

According to the Uniform Commercial Code,which of the following are considered banks?

Correct AnswerverifiedShow Answer

If an instrument fails to qualify as a negotiable instrument,it means that the instrument fails to be an enforceable contract.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

With a(n) ________ instrument,payment can be made only at a specific time designated in the future.

Correct AnswerverifiedShow Answer

Who may endorse an instrument made payable to a legal entity such as a partnership?

Correct AnswerverifiedShow Answer

An instrument "payable on demand" is one that ________.

Correct AnswerverifiedShow Answer

Anne orally promises Judy that in return for Judy washing Anne's dog,Anne unconditionally promises to pay Judy $50 the next Wednesday.Is a contract formed,and if so,is it negotiable?

Correct AnswerverifiedBased on the facts presented,a contract ...View AnswerShow Answer

Instruments payable to "cash" are considered bearer instruments.

Correct AnswerverifiedShow Answer

In the case of multiple forgeries by the same wrongdoer,if a customer examines a bank statement and does not notify the bank of the first forgery within the time required by the Uniform Commercial Code,what is the effect on subsequent forgeries assuming the bank is not negligent?

Correct AnswerverifiedShow Answer

If a check is not presented to a bank within ________ of its date,the check is considered a stale check.

Correct AnswerverifiedShow Answer

In the check collection process,the first bank that receives the check for payment is the ________ bank.

Correct AnswerverifiedShow Answer

Correct Answer
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Under the properly payable rule,a bank h...
View Answer

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verified

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Correct Answer
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Correct Answer
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Correct Answer
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Based on the facts presented,a contract ...
View Answer

Correct Answer
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