Question 1

Explain the shelter rule.

Accepted Answer

Under the shelter rule,the transferor of...

Question 2

Which of the following can be negotiable?

Accepted Answer

A)  A promissory note that states, "Pay to Floyd Burchett $3000 on September 1, 2012."
B)  A check written on the standard check form that does not state the date it was issued.
C)  A promissory note from Farmer Douglas to Hainey Seeds, Inc.promising to pay for the seed purchased in the spring with bushels of grain harvested in the fall.
D)  An oral promise to pay to the order of Justin $500 on demand.

Question 3

Valley National Bank issued a note promising to repay an investor on October 1,2011,three years from the date of issue,plus interest.The note:

Accepted Answer

A)  is a certificate of deposit, and it will pay a lower rate of interest than a regular savings account at Valley.
B)  is a certificate of deposit, and it will pay a higher rate of interest than a regular savings account at Valley.
C)  is a certificate of deposit, and whether the bank pays a higher or lower rate of interest than it pays on its regular savings accounts depends upon particular bank policy.
D)  constitutes a trade acceptance.

Question 4

To be negotiable,a check must be in writing.Under the UCC,a check:

Accepted Answer

A)  must be written on standard size paper of 6" ´ 2.5".
B)  must be written on an official bank form.
C)  need not be on any official form or even on paper.
D)  must be confirmed by a bank if not on an official form.

Question 5

Define commercial paper and explain what it is used for.

Accepted Answer

Commercial paper is a contract to pay mo...

Question 6

Handy Hardware purchases 1200 metallic hooks from Heavy Metals for $1.25 each.Handy promises to pay the money in three months.Heavy Metals wants the money now,as well as keeping Handy as a customer.Heavy Metals (as drawer) drafts an instrument ordering Handy (as drawee) to pay $1500 to First Bank (the payee) .This instrument is:

Accepted Answer

A)  a check.
B)  a promissory note.
C)  a trade acceptance.
D)  a payable on demand note.

Question 7

Which of the following requirements must an instrument meet in order to be negotiable?

Accepted Answer

A)  It must be in writing.
B)  It must contain an unconditional promise to pay.
C)  It must be signed by the drawe.
D)  All of the above.

Question 8

Laurel Speckle received a check from State University.She indorsed the check as follows: "For Deposit only,/s/ Laurel Speckle." Laurel's indorsement is a:

Accepted Answer

A)  blank indorsement.
B)  special indorsement.
C)  restrictive indorsement.
D)  None of the above is correct.

Question 9

Margo is in possession of a check issued to her by Felix.The check states,"Pay to the order of Margo." If Margo wishes to transfer the check to Pete to pay a debt she owes him,all she needs to do is indorse the back of the check and give it to him.

Accepted Answer

A) True 
 B)False

Question 10

Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.

Accepted Answer

A) True 
 B)False

Question 11

A possessor of non-negotiable paper has the same rights as the person who made the original contract.

Accepted Answer

A) True 
 B)False

Question 12

Generally,Rita signs her name using an infinity symbol rather than her legal name.Rita signed an instrument using this symbol.Which statement is correct?

Accepted Answer

A)  The instrument cannot be negotiable.To be a negotiable, the instrument must be signed in Rita's legal name.
B)  The instrument cannot be negotiable.To be negotiable, the instrument must be signed in Rita's given name.
C)  The instrument cannot be negotiable.To be negotiable, the instrument must be signed using letters from the alphabet.
D)  The instrument can be negotiable.Rita intended to indicate her signature.

Question 13

Charlene has possession of a check made out to her order which she received in payment for writing a manuscript for her publisher.Charlene is a holder in due course and the publisher cannot claim any "real" defenses to payment.Charlene has an unconditional right to be paid for the check.

Accepted Answer

A) True 
 B)False

Question 14

When a holder in due course transfers an instrument,the recipient acquires all the same rights even if he is not a holder in due course himself.This is the definition of:

Accepted Answer

A)  negotiability.
B)  the shelter rule.
C)  a claim in recoupment.
D)  a special indorsement.

Question 15

Personal and real defenses are valid against an ordinary holder,only real defenses can be used against a holder in due course.

Accepted Answer

A) True 
 B)False

Question 16

An instrument is negotiable if it satisfies six standards.Which of the following is a standard of negotiability?

Accepted Answer

A)  The instrument can be oral provided there is proof beyond a reasonable doubt.
B)  The instrument must be payable on demand.
C)  The instrument must be conditional.
D)  The instrument must state a definite sum of money.

Question 17

In the Rosenbaum v.Bulow,the court ruled that Bulow neither gave value for the promissory note nor acted in good faith.

Accepted Answer

A) True 
 B)False

Question 18

The Hartford Accident & Indemnity Co.v.American Express,Co.,the New York Court of Appeals discussed:

Accepted Answer

A)  the signature requirement for negotiable instruments.
B)  the concept of holder in due course.
C)  the bankruptcy defense.
D)  the shelter rule.

Question 19

The term "issuer":

Accepted Answer

A)  is not used in relation to commercial paper.
B)  is an all-purpose term that means both maker and drawer.
C)  is synonymous with drawee.
D)  is used in relation to commercial paper only to indicate the bank which creates a certificate of deposit.

Question 20

A check is the most common form of a draft.

Accepted Answer

A) True 
 B)False

Exam 22: Creating a Negotiable Instrument

Laurel Speckle received a check from State University.She indorsed the check as follows: "For Deposit only,/s/ Laurel Speckle." Laurel's indorsement is a:

Correct Answer
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The Hartford Accident & Indemnity Co.v.American Express,Co.,the New York Court of Appeals discussed:

Correct Answer
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Margo is in possession of a check issued to her by Felix.The check states,"Pay to the order of Margo." If Margo wishes to transfer the check to Pete to pay a debt she owes him,all she needs to do is indorse the back of the check and give it to him.

Correct Answer
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Generally,Rita signs her name using an infinity symbol rather than her legal name.Rita signed an instrument using this symbol.Which statement is correct?

Correct Answer
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A check is the most common form of a draft.

Correct Answer
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The term "issuer":

Correct Answer
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Define commercial paper and explain what it is used for.

Correct Answer
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Commercial paper is a contract to pay mo...
View Answer

Which of the following requirements must an instrument meet in order to be negotiable?

Correct Answer
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Which of the following can be negotiable?

Correct Answer
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A possessor of non-negotiable paper has the same rights as the person who made the original contract.

Correct Answer
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Charlene has possession of a check made out to her order which she received in payment for writing a manuscript for her publisher.Charlene is a holder in due course and the publisher cannot claim any "real" defenses to payment.Charlene has an unconditional right to be paid for the check.

Correct Answer
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Explain the shelter rule.

Correct Answer
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Under the shelter rule,the transferor of...
View Answer

Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.

Correct Answer
verified

Personal and real defenses are valid against an ordinary holder,only real defenses can be used against a holder in due course.

Correct Answer
verified

To be negotiable,a check must be in writing.Under the UCC,a check:

Correct Answer
verified

In the Rosenbaum v.Bulow,the court ruled that Bulow neither gave value for the promissory note nor acted in good faith.

Correct Answer
verified

When a holder in due course transfers an instrument,the recipient acquires all the same rights even if he is not a holder in due course himself.This is the definition of:

Correct Answer
verified

Valley National Bank issued a note promising to repay an investor on October 1,2011,three years from the date of issue,plus interest.The note:

Correct Answer
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An instrument is negotiable if it satisfies six standards.Which of the following is a standard of negotiability?

Correct Answer
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Correct Answer
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Exam 22: Creating a Negotiable Instrument

Laurel Speckle received a check from State University.She indorsed the check as follows: "For Deposit only,/s/ Laurel Speckle." Laurel's indorsement is a:

Correct AnswerverifiedShow Answer

The Hartford Accident & Indemnity Co.v.American Express,Co.,the New York Court of Appeals discussed:

Correct AnswerverifiedShow Answer

Margo is in possession of a check issued to her by Felix.The check states,"Pay to the order of Margo." If Margo wishes to transfer the check to Pete to pay a debt she owes him,all she needs to do is indorse the back of the check and give it to him.

Correct AnswerverifiedShow Answer

Generally,Rita signs her name using an infinity symbol rather than her legal name.Rita signed an instrument using this symbol.Which statement is correct?

Correct AnswerverifiedShow Answer

A check is the most common form of a draft.

Correct AnswerverifiedShow Answer

The term "issuer":

Correct AnswerverifiedShow Answer

Define commercial paper and explain what it is used for.

Correct AnswerverifiedCommercial paper is a contract to pay mo...View AnswerShow Answer

Which of the following requirements must an instrument meet in order to be negotiable?

Correct AnswerverifiedShow Answer

Which of the following can be negotiable?

Correct AnswerverifiedShow Answer

A possessor of non-negotiable paper has the same rights as the person who made the original contract.

Correct AnswerverifiedShow Answer

Charlene has possession of a check made out to her order which she received in payment for writing a manuscript for her publisher.Charlene is a holder in due course and the publisher cannot claim any "real" defenses to payment.Charlene has an unconditional right to be paid for the check.

Correct AnswerverifiedShow Answer

Explain the shelter rule.

Correct AnswerverifiedUnder the shelter rule,the transferor of...View AnswerShow Answer

Trisha loaned Brian $600 evidenced by a promissory note.When Brian paid off the loan,he did not ask Trisha for the note.She sold it to Carin,a holder in due course.Brian does not have to pay Carin since he already paid Trisha the full $600.

Correct AnswerverifiedShow Answer

Personal and real defenses are valid against an ordinary holder,only real defenses can be used against a holder in due course.

Correct AnswerverifiedShow Answer

To be negotiable,a check must be in writing.Under the UCC,a check:

Correct AnswerverifiedShow Answer

In the Rosenbaum v.Bulow,the court ruled that Bulow neither gave value for the promissory note nor acted in good faith.

Correct AnswerverifiedShow Answer

When a holder in due course transfers an instrument,the recipient acquires all the same rights even if he is not a holder in due course himself.This is the definition of:

Correct AnswerverifiedShow Answer

Valley National Bank issued a note promising to repay an investor on October 1,2011,three years from the date of issue,plus interest.The note:

Correct AnswerverifiedShow Answer

An instrument is negotiable if it satisfies six standards.Which of the following is a standard of negotiability?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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Correct Answer
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Commercial paper is a contract to pay mo...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Under the shelter rule,the transferor of...
View Answer

Correct Answer
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Correct Answer
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