Question 1

A ______ is a specific draft,drawn by the owner of a checking account,ordering the bank to pay the payee from that drawer's account.

Accepted Answer

A)   Promissory contract
B)   Certificates of deposit
C)   Note
D)   Check
E)   Time instrumentF) B) and D)
G) B) and C)

Question 2

Which of the following is true when an instrument fails to meet the technical requirements necessary to qualify as a negotiable instrument?

Accepted Answer

A)   The instrument is still enforced as a negotiable instrument if it has been transferred to a holder in due course.
B)   The instrument is still enforced as a negotiable instrument if it has been accepted by a bank.
C)   The instrument is still enforced as a negotiable instrument if the holder can establish detrimental reliance based on a reasonable belief that the instrument qualified as a negotiable instrument.
D)   The instrument is may qualify as an enforceable contract.
E)   The instrument is null and void and of no use to the holder.F) None of the above
G) C) and E)

Question 3

Which of the following is true regarding payment on a time instrument?

Accepted Answer

A)   It is payable in the same manner as a demand instrument.
B)   It may be made payable at a past or future date so long as a method for computing past-due interest is set forth in the document.
C)   It must be payable at a future time, and the date must be determinable through a separate instrument prepared in conjunction with the time instrument.
D)   It may be made payable at a past or future date so long as the method of computing interest is set forth either in the time instrument itself or in a separate document prepared in conjunction with the time instrument.
E)   It must be payable at a specific future time which is easily determinable from the document itself.F) B) and D)
G) None of the above

Question 4

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

Accepted Answer

A)   Simple contracts are assigned to an assignee, while negotiable instruments are negotiated to a holder.
B)   Simple contracts may be assigned to an assignee or negotiated to a holder while negotiable instrument may only be negotiated to a holder in due course.
C)   Simple contracts may be assigned to an assignee or negotiated to a holder while negotiable instrument 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 may be assigned to a holder while negotiable instruments may not be assigned or negotiated.F) A) and E)
G) A) and B)

Question 5

Which of the following is true regarding the instrument signed by Helen promising to pay William a 10% commission if he sold her car?

Accepted Answer

A)   The instrument is negotiable.
B)   The instrument is not negotiable only for the reason that it is based on a condition.
C)   The instrument is not negotiable only for the reason that Helen is not a merchant.
D)   The instrument is not negotiable only for the reason that it is not for a sum certain.
E)   The instrument is not negotiable because it is based on a condition and also because it is not for a sum certain.F) All of the above
G) C) and E)

Question 6

Which of the following is true if an instrument fails to qualify as a negotiable instrument?

Accepted Answer

A)   The instrument by definition fails to be a good contract.
B)   Failure to qualify as a negotiable instrument does not mean the instrument fails to be a good contract.
C)   The instrument by definition is a good contract.
D)   The instrument by definition is a good contract only if it is made out in an amount less than $1,000.
E)   The instrument by definition is a good contract only if it is made out in an amount more than $1,000.F) B) and C)
G) C) and D) B

Question 7

Which of the following is true regarding the status of negotiable instruments in regard to international transactions?

Accepted Answer

A)   The World Trade Organization defines and enforces concepts of negotiability for all member nations.
B)   The United Nations Committee on Contracts defines and enforces concepts of negotiability for all member nations.
C)   The Uniform Commercial Code is accepted as the defining word on negotiability in North America and Europe.
D)   The Uniform Negotiation Act, agreed upon by a majority of countries, addresses definitions in regard to negotiability.
E)   The definitions in regard to negotiable contracts vary from country to country.F) All of the above
G) A) and B)

Question 8

Set forth the two exceptions to the time-certain requirement for negotiability discussed in the text.

Accepted Answer

First,an instrument that permits acceleration of payment does not violate the time-certain requirement as long as there is a fixed date of payment if the acceleration clause is not satisfied.Second,an instrument that permits an extension of the payment is still negotiable if there is a fixed time for payment.The time of payment may be extended if it is at the election of the holder.

Question 9

Documents used as payments to facilitate commercial transactions were labeled as ______ under article 3 of the UCC.

Accepted Answer

A)   Commerce paper
B)   Commercial paper
C)   Commerce notes
D)   Negotiable instruments
E)   Payment notesF) All of the above
G) B) and C)

Question 10

Which of the following was the ruling of the court in the Case Opener regarding the gambler who wrote bad checks to a casino to purchase markers and then tried to avoid payment on the basis of an oral agreement by which a casino host told the gambler that he already had sufficient remaining casino credit to receive the markers?

Accepted Answer

A)   The potential oral agreement as to the markers was irrelevant to the negotiability of the checks.
B)   The oral agreement was relevant to the negotiability of the checks, but it did not affect the gambler's liability on the checks.
C)   The oral agreement was relevant to the negotiability of the checks, and acted to excuse the gambler from liability on the checks.
D)   The oral agreement established that the checks were not negotiable instruments.
E)   The oral agreement established breach of contract; therefore, while another type of instrument would have been negotiable, the checks involved were not.F) A) and E)
G) All of the above

Question 11

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

Accepted Answer

A)   Demand
B)   Order
C)   Transactional
D)   Bearer
E)   PayorF) B) and D)
G) C) and D)

Question 12

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)   Nonrecourse
E)   ImmediateF) A) and B)
G) C) and D) A

Question 13

Which of the following is a draft with respect to which the drawer and drawee are the same bank or branches of the same bank?

Accepted Answer

A)   Cashier's check
B)   Traveler's check
C)   Certified check
D)   Check certificate
E)   Approved draftF) A) and B)
G) B) and E)

Question 14

Which of the following is a promise made by a bank to pay a payee a certain amount of money at a future time?

Accepted Answer

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

Question 15

Suzanne 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 Suzanne 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 Suzanne and ABC Bank?

Accepted Answer

A)   Suzanne will prevail because she was current on payments, and the bank did not exercise good faith in calling the note.
B)   Suzanne will prevail because the reference to prepayment destroyed the note's negotiability.
C)   Suzanne will prevail because the reference to interest after default destroyed the note's negotiability.
D)   The bank will prevail because, although the note is not a negotiable instrument, the bank has an enforceable contract.
E)   The bank will win because it had the right to call for payment of the demand instrument.F) A) and D)
G) B) and D)

Question 16

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,is it negotiable,and why or why not?

Accepted Answer

It appears that a contract is formed bec...

Question 17

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

Question 18

Which of the following does not satisfy the requirement that to be negotiable an instrument must be payable at a time certain or on demand?

Accepted Answer

A)   The instrument states a specific date for payment.
B)   The instrument is dated and then states that "payment will be made 5 days after the above date."
C)   An instrument that states that payments is due at a fixed time but may be extended at the election of the holder.
D)   An instrument that states that "payment will be made 10 days after delivery of the goods."
E)   An instrument that permits acceleration of payment and has a fixed date of payment if the acceleration clause is not affected.F) D) and E)
G) B) and E)

Question 19

If an instrument is silent as to the time of payment,which of the following is assumed by the UCC?

Accepted Answer

A)   That it is a demand instrument
B)   That it is a time instrument
C)   That it is a void instrument
D)   That it is a voidable instrument
E)   That it is a nonnegotiable instrumentF) A) and C)
G) C) and D)

Question 20

All negotiable documents may be in electronic format.

Accepted Answer

A) True 
 B)False

Exam 26: Negotiable Instruments: Negotiability and Transferability

A ______ is a specific draft,drawn by the owner of a checking account,ordering the bank to pay the payee from that drawer's account.

Correct Answer
verified

Which of the following is true when an instrument fails to meet the technical requirements necessary to qualify as a negotiable instrument?

Correct Answer
verified

Which of the following is true regarding payment on a time instrument?

Correct Answer
verified

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

Correct Answer
verified

Which of the following is true regarding the instrument signed by Helen promising to pay William a 10% commission if he sold her car?

Correct Answer
verified

Which of the following is true if an instrument fails to qualify as a negotiable instrument?

Correct Answer
verified
B

Which of the following is true regarding the status of negotiable instruments in regard to international transactions?

Correct Answer
verified

Set forth the two exceptions to the time-certain requirement for negotiability discussed in the text.

Documents used as payments to facilitate commercial transactions were labeled as ______ under article 3 of the UCC.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

With a[n] ______ instrument,payment can be made only at a specific time designated in the future.

Correct Answer
verified
A

Which of the following is a draft with respect to which the drawer and drawee are the same bank or branches of the same bank?

Correct Answer
verified

Which of the following is a promise made by a bank to pay a payee a certain amount of money at a future time?

Correct Answer
verified

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,is it negotiable,and why or why not?

Correct Answer
verified
It appears that a contract is formed bec...
View 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 Answer
verified

Which of the following does not satisfy the requirement that to be negotiable an instrument must be payable at a time certain or on demand?

Correct Answer
verified

If an instrument is silent as to the time of payment,which of the following is assumed by the UCC?

Correct Answer
verified

All negotiable documents may be in electronic format.

Correct Answer
verified

Exam 26: Negotiable Instruments: Negotiability and Transferability

A ______ is a specific draft,drawn by the owner of a checking account,ordering the bank to pay the payee from that drawer's account.

Correct AnswerverifiedShow Answer

Which of the following is true when an instrument fails to meet the technical requirements necessary to qualify as a negotiable instrument?

Correct AnswerverifiedShow Answer

Which of the following is true regarding payment on a time instrument?

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 the instrument signed by Helen promising to pay William a 10% commission if he sold her car?

Correct AnswerverifiedShow Answer

Which of the following is true if an instrument fails to qualify as a negotiable instrument?

Correct AnswerverifiedB

Which of the following is true regarding the status of negotiable instruments in regard to international transactions?

Correct AnswerverifiedShow Answer

Set forth the two exceptions to the time-certain requirement for negotiability discussed in the text.

Documents used as payments to facilitate commercial transactions were labeled as ______ under article 3 of the UCC.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

With a[n] ______ instrument,payment can be made only at a specific time designated in the future.

Correct AnswerverifiedA

Which of the following is a draft with respect to which the drawer and drawee are the same bank or branches of the same bank?

Correct AnswerverifiedShow Answer

Which of the following is a promise made by a bank to pay a payee a certain amount of money at a future time?

Correct AnswerverifiedShow Answer

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,is it negotiable,and why or why not?

Correct AnswerverifiedIt appears that a contract is formed bec...View AnswerShow 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 of the following does not satisfy the requirement that to be negotiable an instrument must be payable at a time certain or on demand?

Correct AnswerverifiedShow Answer

If an instrument is silent as to the time of payment,which of the following is assumed by the UCC?

Correct AnswerverifiedShow Answer

All negotiable documents may be in electronic format.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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A

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
It appears that a contract is formed bec...
View 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 Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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