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Exam 21: Holder in Due Course and Liability of Parties

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Question 31

Multiple Choice

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In which of the following accommodations is an accommodation party primarily liable?

A) in a guarantee of payment
B) in a guarantee of collection
C) in a guarantee of demand
D) in a guarantee of promise

E) All of the above
F) B) and C)

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Question 32

True/False

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Any passage of an instrument other than its issuance and presentment for payment is considered a transfer.

A) True
B) False

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Question 33

Multiple Choice

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Which of the following has primary liability when it comes to instruments with a promise to pay?

Under the UCC's ________ requirement,a person cannot qualify as an HDC if he or she has noticed that the instrument is overdue.

Which of the following actions renders all parties as discharged from liability to a negotiable instrument?

________ is a type of universal defense where a person is deceived into signing a negotiable instrument,thinking that it is something else.

An instrument is dishonored when it is presented for payment and payment is refused.

If there is a breach of contract,the negotiable instrument may be deemed unenforceable by a holder but enforceable by an HDC.

Stanley,who owes Milton money,indorses a draft to him with the term "without recourse." The instrument later is dishonored.Which of the following types of indorser is Stanley?

Martin borrows $15,000 from Tom,in the form of a check,and signs a promissory note,promising to pay Tom this amount plus 10 percent interest in one year.Tom indorses the note and negotiates it to Fronston.Fronston indorses the note and negotiates it to Liza.Liza presents the note to Martin for payment when the note is due.Martin refuses to pay the note.Who is secondarily liable to pay Liza?

A person who has been authorized to sign a negotiable instrument on behalf of another person is known as a(n) ________.

Sylvester,acting as a representative agent for Jerry,signs a negotiable instrument with the signature-Sylvester,by Jerry,agent.What kind of liability does Sylvester have for this type of signature?

A person who signs an instrument and lends his or her name,and credit to another party to the instrument is referred to as a(n) ________.

The imposter rule eliminates HDC status with regard to negotiable instruments that arise out of certain consumer credit transactions.

Charles executes a note payable to Hilarie for $1,000 for goods she purchased from him.Hilarie transfers the note to Lucas,who pays $850 for the note.By doing this,which requirement for acquiring the holder in due course status does Lucas meet?

Discharge of an instrument by payment or cancellation is a type of ________.

The location of the signature on an instrument generally determines the signer's capacity.

Universal defenses can be raised only against ordinary holders and not holders in due course to deny the payment of negotiable instruments.

A(n) ________ is an action or event that relieves certain parties from liability on negotiable instruments.

Only personal defenses and not universal defenses may be asserted against an HDC.