Question 1

When is a demand instrument, such as a check, payable?

Accepted Answer

A)   As soon as it is issued.
B)   Twenty-four hours after it is issued.
C)   Two days after it is issued.
D)   At midnight the day it is issued.
E)   One hour after it is issued.F) C) and D)
G) A) and C)

Question 2

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 3

The words "pay to cash" are sufficient words of negotiability.

Accepted Answer

A) True 
 B)False

Question 4

"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 on August 15, 2013, 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. Since she was trying to save money on books, she also agreed to buy Tim's U.S. 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, to his order, a DVD she had in return the next day.
-Which of the following is true regarding Molly's assertion that Richard did not have a negotiable instrument?

Accepted Answer

A)   Molly is incorrect, and the document by which Tim assigned the right to Richard is a negotiable instrument in regard to her duty to pay.
B)   Molly is correct because her agreement with Tim was not in a writing containing words of negotiability.
C)   Molly is correct because Richard was not a party to the original contract.
D)   Molly is incorrect because her admission establishes the existence of a negotiable instrument between her and Tim that could be assigned to Richard.
E)   Molly is correct because the amount at issue is insufficient to create a negotiable instrument.F) B) and C)
G) C) and E)

Question 5

The law does not permit an oral negotiable instrument.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A)   Similar to contracts, negotiable instruments require consideration.
B)   Similar to contracts, negotiable instruments require offer and acceptance; but unlike contracts, negotiable instruments do not require consideration.
C)   A negotiable instrument is a form of a contract and may be referred to as such.
D)   Negotiable instruments lack the requirements of contracts involving consideration, offer, and acceptance.
E)   Negotiable instruments require the same elements as contracts in regard to consideration, offer and acceptance.F) A) and B)
G) C) and D)

Question 7

Set forth the definition of a traveler's check.

Accepted Answer

A traveler's check is an instrument that...

Question 8

Which of the following is an example of a negotiable instrument?

Accepted Answer

A)   Checks but not drafts or promissory notes
B)   Drafts and checks, but not promissory notes
C)   Promissory notes, but not drafts or checks
D)   Promissory notes and checks, but not drafts
E)   Checks, drafts, and promissory notesF) None of the above
G) C) and E)

Question 9

A note is a promise, by the maker of the note, to pay a payee.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is true regarding the type of currency needed to satisfy the currency requirement for negotiability in this country?

Accepted Answer

A)   U.S. dollars is the only satisfactory currency
B)   U.S. dollars or English pounds are the only satisfactory currency
C)   U.S. dollars, English pounds, or Euros are the only satisfactory currency
D)   U.S. dollars, English pounds, Euros, and Japanese yen are all satisfactory currency
E)   U.S. dollars, English pounds, Euros, Japanese yen, and gold are all satisfactory currencyF) B) and C)
G) A) and D)

Question 11

The UCC defines an instrument "payable on demand" as one that ____.

Accepted Answer

A)   States that it is payable on demand or at sight, or that it is payable 20 days after presentment
B)   States that it is payable 30 days after presentment
C)   Is payable within 10 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) A) and E)
G) None of the above

Question 12

Which of the following is the most likely result if Phil attempts to require that the bank reimburse him for the value of the check cashed by Helen?

Accepted Answer

A)   The check was an order instrument, and the bank must take the loss because it should only have provided funds to Phil.
B)   Because the check was an order instrument, the bank was within its rights to pay Helen because she presented the check; and Phil has no rights against the bank.
C)   Because the check was a bearer instrument, the bank must take 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 Helen; and 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 presented by Helen unless the bank can establish by a preponderance of the evidence that Helen misrepresented herself as an agent of Phil.F) B) and C)
G) A) and E)

Question 13

Which of the following is true regarding whether an agent's signature may satisfy the requirement of negotiability that the signature of a maker or drawer appear?

Accepted Answer

A)   A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability.
B)   An agent's signature on behalf of his or her principal cannot bind the principal and does not satisfy the signature requirement for negotiability.
C)   An agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if specific authorization from the principal allowing the agent to act on the specific transaction at issue is attached to the document.
D)   A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if the instrument is for an amount over $1,000.
E)   A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if the instrument is in an amount of $1,000 or less.F) A) and C)
G) B) and D)

Question 14

Even the mention of another document in an instrument prevents the instrument from being negotiable.

Accepted Answer

A) True 
 B)False

Question 15

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

Question 16

"Yard Mowing." Paula agreed to mow John's yard once a week for $50 per week throughout the summer. Paula, however, was having trouble getting her money from John. On one occasion, he in handwriting gave her in IOU saying "I, John Jones, owe Paula Smith $50." A couple of weeks later, John did not have the money to pay Paula what he owed her, and he handwrote the following on a piece of paper and gave it to her: "I, John Jones, promise to pay Paula Smith or to bearer, the sum of $100 on Monday, July 22, 2013." Paula quit mowing John's yard; and, disgusted with John, Paula assigned both documents to Vince. When Vince presented the documents to John, John refused to pay on the basis that after inspecting the yard, he decided that Paula was doing a poor job. Vince told him the documents constituted negotiable instruments, but John pointed out that he had not signed the documents with his signature at the end.
-Disregarding the issue of whether Paula properly performed, is the statement "I, John Jones, promise to pay Paula Smith or to bearer, the sum of $100 on Monday, July 22, 2008," without a signature anywhere else on the document, sufficient to satisfy the signature requirement of negotiability?

Accepted Answer

A)   Yes, because it contains an unconditional promise to pay; and in the handwritten promise, the maker wrote his own name.
B)   Yes, it is sufficient regardless of whether it is in handwriting or not because it contains an unconditional promise to pay.
C)   No, because it was not signed at the bottom.
D)   Yes, but only if John later signed another document confirming that he meant the handwritten statement to constitute his signature.
E)   No, because it was not signed at the bottom or anywhere else on the document.F) C) and E)
G) B) and C)

Question 17

Which of the following is a check accepted by the bank on which it is drawn?

Accepted Answer

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

Question 18

A draft is an order by a drawer to a drawee to pay a payee.

Accepted Answer

A) True 
 B)False

Question 19

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

Question 20

"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 by signing his name planning to take it to the bank the next day. Unfortunately, Phil lost the check which was found by Helen and cashed by the local bank. Helen then left town.
-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) C) and D)
G) D) and E)

Exam 26: Negotiable Instruments: Negotiability and Transferability

Set forth the definition of a traveler's check.

Correct Answer
verified
A traveler's check is an instrument that...
View Answer

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

Correct Answer
verified

Which of the following is a check accepted by the bank on which it is drawn?

Correct Answer
verified

A draft is an order by a drawer to a drawee to pay a payee.

Correct Answer
verified

A note is a promise, by the maker of the note, to pay a payee.

Correct Answer
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The law does not permit an oral negotiable instrument.

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

Correct Answer
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Which of the following is true regarding whether an agent's signature may satisfy the requirement of negotiability that the signature of a maker or drawer appear?

Correct Answer
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Even the mention of another document in an instrument prevents the instrument from being negotiable.

Correct Answer
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Correct Answer
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Which of the following is true regarding the type of currency needed to satisfy the currency requirement for negotiability in this country?

Correct Answer
verified

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

Correct Answer
verified

When is a demand instrument, such as a check, payable?

Correct Answer
verified

The words "pay to cash" are sufficient words of negotiability.

Correct Answer
verified

The UCC defines an instrument "payable on demand" as one that ____.

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

Correct Answer
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Which of the following is the most likely result if Phil attempts to require that the bank reimburse him for the value of the check cashed by Helen?

Correct Answer
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Which of the following is an example of a negotiable instrument?

Correct Answer
verified

Exam 26: Negotiable Instruments: Negotiability and Transferability

Set forth the definition of a traveler's check.

Correct AnswerverifiedA traveler's check is an instrument that...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a check accepted by the bank on which it is drawn?

Correct AnswerverifiedShow Answer

A draft is an order by a drawer to a drawee to pay a payee.

Correct AnswerverifiedShow Answer

A note is a promise, by the maker of the note, to pay a payee.

Correct AnswerverifiedShow Answer

The law does not permit an oral negotiable instrument.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is true regarding whether an agent's signature may satisfy the requirement of negotiability that the signature of a maker or drawer appear?

Correct AnswerverifiedShow Answer

Even the mention of another document in an instrument prevents the instrument from being negotiable.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true regarding the type of currency needed to satisfy the currency requirement for negotiability in this country?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When is a demand instrument, such as a check, payable?

Correct AnswerverifiedShow Answer

The words "pay to cash" are sufficient words of negotiability.

Correct AnswerverifiedShow Answer

The UCC defines an instrument "payable on demand" as one that ____.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is the most likely result if Phil attempts to require that the bank reimburse him for the value of the check cashed by Helen?

Correct AnswerverifiedShow Answer

Which of the following is an example of a negotiable instrument?

Correct AnswerverifiedShow Answer

Correct Answer
verified
A traveler's check is an instrument that...
View Answer

Correct Answer
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