Question 1

An instrument must be explicitly dishonored; a refusal to pay does not necessarily mean that the instrument has been dishonored.

Accepted Answer

A) True 
 B)False

Question 2

[Banking Problems] Celine is a loan officer at ABC Bank. Being somewhat dishonest, Celine tells Rohan, a customer of the bank, who is wealthy and rarely checks the status of outstanding loans and balances that she is collecting money for a local animal shelter. She asks him to sign a pledge that he will contribute $50 to the animal shelter. However, through covering pertinent terms of the document, Celine actually had Rohan sign a promissory note made out to her for $5,000, which she later endorsed to Miguel. After leaving the bank, Rohan proceeded to one of his businesses, a used car dealership. Taylor comes in to purchase a used car. He and Rohan agree that Taylor will purchase a car for $3,000. Zoe also comes in, and she and Rohan agree that she will purchase a used car for $4,000. Both Taylor and Zoe make out promissory notes payable to Rohan. At the end of the day, Rohan is looking through the notes and decides that Taylor's was mistakenly made out for $3,000 when it should have been $3,500. Rohan mistakenly, but honestly, believes that the deal was for $3,500. Therefore, he changes the note to reflect that Taylor owes $3,500. Rohan, on the other hand, simply does not like Zoe. He decides that $4,000 was not enough for the car. Accordingly, he changes the note to $4,500.
-Which of the following is true regarding electronic signatures?

Accepted Answer

A)   Electronic signatures are not widely accepted because of the likelihood of fraud.
B)   Many banking companies have policies that deem the merchant responsible for the charge if the buyer's payment is fraudulent.
C)   Many banking companies have policies that deem the buyer responsible for fraudulent charges.
D)   Banking companies are prohibited from having policies that deem the merchant responsible for a buyer's fraudulent charges.
E)   There are few risks for companies who conduct business through an online banking system.F) A) and C)
G) C) and D)

Question 3

[Run Around] Hema issues a promissory note to Rahul. Rahul endorses the note and transfers it to Anne. Anne endorses the note and transfers it to Floyd. Floyd presents the note to Hema for payment. When Floyd presents the note to Hema, she asks him for reasonable identification. He did not have any identification with him and told her that she had no right to dishonor the instrument. Hema continued to insist, so finally, on the same day, Rahul obtained clear identification and presented it to her. Nevertheless, even with proper identification, Hema refused to pay the note, claiming that she lacked the funds with which to do so. After properly providing notification of dishonor to both Anne and Rahul, Floyd requested that Anne pay the note, but she told him that he would have to get his money from Rahul. Floyd has been trying to call Rahul for 35 days, but Rahul did not return his telephone calls. Floyd is exasperated; and within 40 days of when Hema refuses payment, he notifies Hema, Rahul, and Anne that the promissory note has been dishonored by Hema and that he is asserting liability on the note against all of them. Hema calls him up and says that she never dishonored the note, she simply lacks the funds with which to immediately pay and thinks that he should seek recovery elsewhere.
-Which of the following is true regarding Floyd's entitlement to payment from Hema?

Accepted Answer

A)   Floyd is only entitled to payment from Hema because Anne dishonored the payment.
B)   Floyd is not entitled to payment from Hema unless Rahul, in addition to Anne, dishonors the instrument.
C)   Floyd is never entitled payment from Hema because he must seek recovery only from Anne.
D)   Floyd is entitled to recover on the note from Hema.
E)   Floyd is entitled to recover on the note from Hema only if both Anne and Rahul have filed bankruptcy or are otherwise proven insolvent.F) None of the above
G) B) and E)

Question 4

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

Accepted Answer

A)   terminated
B)   released
C)   discharged
D)   abrogated
E)   deliveredF) All of the above
G) C) and E)

Question 5

A party who is primarily liable for an instrument must pay without resorting to any other party.

Accepted Answer

A) True 
 B)False

Question 6

Discuss whether an authorized agent can be held personally liable on a note if the agent did not sign his or her own name. Further discuss the kind of personal liability an agent has who simply signs his or her name to an instrument.

Accepted Answer

The authorized agent cannot be liable if...

Question 7

When it is not possible to determine the status of the party, the general rule is that the party is considered the ________.

Accepted Answer

A)   maker
B)   acceptor
C)   drawer
D)   endorser
E)   endorseeF) A) and D)
G) C) and D)

Question 8

If Kyoko makes a proper tender of the full payment of $1,000 due on Patrick's note on the note's due date, but Patrick improperly refuses to accept the money, any endorsers are discharged from liability.

Accepted Answer

A) True 
 B)False

Question 9

As defined in the UCC, under which of the following circumstances would presentment have occurred?

Accepted Answer

A)   When Chloe presented the check to The Furniture Shop
B)   When Rabia took the check to ABC Bank.
C)   When ABC Bank requested payment from XYZ Bank.
D)   When XYZ Bank notified Rabia that it would not pay based upon insufficient funds.
E)   When Rabia requested that Chloe make the check good.F) D) and E)
G) B) and D)

Question 10

Under this country's laws, banks and not individuals are considered endorsers.

Accepted Answer

A)   China
B)   Japan
C)   Canada
D)   Mexico
E)   AustraliaF) B) and E)
G) A) and B)

Exam 28: Liability, Defenses, and Discharge

Correct Answer
verified

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

Correct Answer
verified

If Kyoko makes a proper tender of the full payment of $1,000 due on Patrick's note on the note's due date, but Patrick improperly refuses to accept the money, any endorsers are discharged from liability.

Correct Answer
verified

An instrument must be explicitly dishonored; a refusal to pay does not necessarily mean that the instrument has been dishonored.

Correct Answer
verified

A party who is primarily liable for an instrument must pay without resorting to any other party.

Correct Answer
verified

Discuss whether an authorized agent can be held personally liable on a note if the agent did not sign his or her own name. Further discuss the kind of personal liability an agent has who simply signs his or her name to an instrument.

Correct Answer
verified
The authorized agent cannot be liable if...
View Answer

When it is not possible to determine the status of the party, the general rule is that the party is considered the ________.

Correct Answer
verified

Correct Answer
verified

Under this country's laws, banks and not individuals are considered endorsers.

Correct Answer
verified

As defined in the UCC, under which of the following circumstances would presentment have occurred?

Correct Answer
verified

Exam 28: Liability, Defenses, and Discharge

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If Kyoko makes a proper tender of the full payment of $1,000 due on Patrick's note on the note's due date, but Patrick improperly refuses to accept the money, any endorsers are discharged from liability.

Correct AnswerverifiedShow Answer

An instrument must be explicitly dishonored; a refusal to pay does not necessarily mean that the instrument has been dishonored.

Correct AnswerverifiedShow Answer

A party who is primarily liable for an instrument must pay without resorting to any other party.

Correct AnswerverifiedShow Answer

Discuss whether an authorized agent can be held personally liable on a note if the agent did not sign his or her own name. Further discuss the kind of personal liability an agent has who simply signs his or her name to an instrument.

Correct AnswerverifiedThe authorized agent cannot be liable if...View AnswerShow Answer

When it is not possible to determine the status of the party, the general rule is that the party is considered the ________.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Under this country's laws, banks and not individuals are considered endorsers.

Correct AnswerverifiedShow Answer

As defined in the UCC, under which of the following circumstances would presentment have occurred?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The authorized agent cannot be liable if...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified