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A(n) ________ is a person who signs an instrument to restrict payment of it,negotiate it,or incur liability.


A) maker
B) acceptor
C) drawer
D) endorser
E) promisor

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

Correct Answer

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When will a party's negligence not permit the party to escape liability for an unauthorized signature?


A) Any type of negligence will result in a party being unable to escape liability for an unauthorized signature.
B) The issue of negligence is irrelevant as to whether a party may escape liability for an unauthorized signature,because a party is always liable for an unauthorized signature.
C) A party who is negligent may not escape liability for an unauthorized signature if the party whose signature was forged behaved so negligently as to substantially contribute to the making of the forgery.
D) A party's negligence will not permit the party to escape liability for an unauthorized signature,but only if the negligence amounts to a finding of recklessness.
E) A party's negligence will not permit the party to escape liability for an unauthorized signature,but only if the negligence involved a certified check.

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

Correct Answer

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A(n) ________ is a party who signs an instrument to provide credit for another party who has also signed the instrument.


A) subrogation party
B) accommodation party
C) third party beneficiary
D) incidental beneficiary
E) intervenor

F) B) and C)
G) C) and E)

Correct Answer

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Which of the following is a person who orders the drawee to pay?


A) Maker
B) Acceptor
C) Drawer
D) Endorser
E) Promisor

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

Correct Answer

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What type of liability occurs when a person signs a negotiable instrument?


A) Warranty
B) Payee
C) Signature
D) Primary
E) Secondary

F) C) and D)
G) C) and E)

Correct Answer

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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?


A) Remand
B) Renunciation
C) Reacquisition
D) Rescission
E) Revocation

F) A) and D)
G) All of the above

Correct Answer

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When a party's liability for a negotiable instrument is terminated,this party's liability has been ________.


A) remanded
B) annulled
C) discharged
D) ratified
E) absconded

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

Correct Answer

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The Uniform Commercial Code imposes liability if the party,or the party's agent,signs the instrument.

A) True
B) False

Correct Answer

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How can an accommodation party sign an instrument?


A) As a maker or a drawer,but not as an acceptor or an endorser.
B) As an acceptor or an endorser,but not as a maker or a drawer.
C) As a maker or an acceptor,but not as a drawer or an endorser.
D) As a drawer or an endorser,but not as a maker or an acceptor.
E) As a maker,a drawer,an acceptor,or an endorser.

F) C) and D)
G) B) and D)

Correct Answer

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Under the Uniform Commercial Code,how can a proper presentment be made?


A) By any commercially reasonable means
B) Through a clearinghouse procedure
C) At a place designated in the instrument
D) By any commercially reasonable means,through a clearinghouse procedure,or at a place designated in the instrument
E) Through a clearinghouse procedure or at the place designated in the instrument,but not by any commercially reasonable means

F) A) and E)
G) None of the above

Correct Answer

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Which of the following are types of warranties regarding instruments?


A) Transfer and acknowledgement
B) Presentment and acknowledgement
C) The implied warranty of merchantability and the implied warranty of title,but not the implied warranty of fitness for a particular purpose
D) Transfer,presentment,the implied warranty of merchantability,the implied warranty of title,and the implied warranty of fitness for a particular purpose
E) Transfer and presentment

F) All of the above
G) A) and E)

Correct Answer

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What type of liability arises when the transfer of the instrument breaches a warranty associated with the instrument?


A) Warranty
B) Payee
C) Signature
D) Primary
E) Secondary

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

Correct Answer

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


A) Ratification
B) Authorization
C) Acknowledgement
D) Rescission
E) Accord and satisfaction

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

Correct Answer

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According to the Uniform Commercial Code,a party may be a holder in due course of a non-negotiable instrument.

A) True
B) False

Correct Answer

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Regardless of whether a transfer is through an endorsement,transfer warranties apply to any future holders.

A) True
B) False

Correct Answer

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What are the conditions for a drawer or endorser to become liable?

Correct Answer

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Three conditions must be met for a drawe...

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According to Uniform Commercial Code Article 3,which of the following is a personal defense to liability on a negotiable instrument?


A) The non-issuance of an instrument
B) The modification of an obligation by a separate agreement
C) The non-delivery of an instrument
D) The non-issuance of an instrument,the modification of an obligation by a separate agreement,or the non-delivery of an instrument
E) The non-delivery of an instrument or the non-issuance of an instrument,but not the modification of an obligation by separate agreement

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

Correct Answer

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According to the Uniform Commercial Code,________ is defined as "honesty in fact and the observance of reasonable commercial standards of fair dealing."


A) merchantability
B) subjective reasonableness
C) objective reasonableness
D) good faith
E) commercial practicability

F) C) and D)
G) A) and B)

Correct Answer

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Which of the following is not a requirement for becoming a holder in due course?


A) The party must be a holder of a complete and authentic negotiable instrument.
B) The holder must take the instrument for value.
C) The holder must take the instrument in good faith.
D) The holder must take the instrument without notice of defects.
E) The holder must either pay for the instrument or receive it as a gift.

F) All of the above
G) C) and D)

Correct Answer

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Angry employee.Martin is in charge of payroll and other expenses for ABC,Inc.He becomes very angry with his boss Adam because Adam started dating Martin's girlfriend Stacy.Martin decided to quit but not before he got some extra money from ABC,Inc.Martin wrote five checks from the account of ABC,Inc.to pay off the five credit card companies that Martin owed money.The credit card companies took the checks without reason to be suspicious as to the source of payment.The checks to the credit card companies in total amounted to $30,000,and each check was in an amount under $10,000.Martin also made out ten checks on the account of ABC to twenty alleged employees who did not really exist.Each of these checks was in the amount of $5,000.Martin took the checks,endorsed and cashed the checks in the names of the various fake employees,and kept the cash.Finally,Martin discovers through office gossip that Adam has been looking for another job with XYZ,Inc.located in a neighboring state and that Adam is supposed to go there for an in person interview in a few weeks.Martin sets up an interview with XYZ,Inc.pretends to be Adam,and induces XYZ,Inc.to give him,posing as Adam,a check for $5,000 as a signing bonus.Martin immediately endorses the check pretending to be Adam and pockets the cash.Finally,Martin leaves town heading for the Caribbean.Is XYZ,Inc.entitled to a refund from its bank for the check the bank paid to Martin posing as Adam?


A) Yes,because Martin forged Adam's name.
B) Yes,because Martin posed as an imposter in regard to Adam.
C) Yes,because the XYZ,Inc.has a cause of action against Martin and can likely get a default judgment.
D) No,because of the imposter rule.
E) No,because of the fictitious-payee rule.

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

Correct Answer

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