Question 1

Acceptable words of negotiability include the words "pay to cash."

Accepted Answer

A) True 
 B)False

Question 2

Provide the definition of a traveler's check.

Accepted Answer

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

Question 3

An instrument fails to be negotiable because it states,"payment will be made by $100 and a rare antique vase." Which of the following scenarios would render the instrument negotiable?

Accepted Answer

A)  The instrument omits the rare antique vase.
B)  The payment clause as-is does not preclude the instrument from being negotiable.
C)  The instrument changes "and" to "or."
D)  The instrument omits $100.
E)  The instrument omits how payment will be made.F) A) and B)
G) A) and D)

Question 4

A contract that is personal or nonassignable cannot be classified as commercial paper.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is known as a substitute for cash?

Accepted Answer

A)  A nonnegotiable instrument
B)  A negotiable instrument
C)  An endorsed payable document
D)  A payable document
E)  A nonpayable documentF) B) and C)
G) A) and B)

Question 6

Which of the following terms 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)  Certificates of deposit
B)  Check
C)  Note
D)  Time instrument
E)  Promissory contractF) A) and D)
G) A) and C)

Question 7

For an instrument to be negotiable,the instrument must indicate that it was created for the purpose of being ________.

Accepted Answer

A)  Transferred
B)  Retained
C)  Paid
D)  Banked
E)  MaintainedF) A) and B)
G) B) and D)

Question 8

Which of the following is false regarding the UCC's signature requirement for a negotiable instrument?

Accepted Answer

A)  A signature may be made manually.
B)  The signature may be an assumed name.
C)  The UCC prohibits an X from being used as a signature.
D)  A signature may be made by means of a device or machine.
E)  The signature of an agent on behalf of the principal binds the principal and satisfies the signature requirement.F) None of the above
G) A) and D)

Question 9

Article 3 of the UCC recognizes three types of negotiable instruments: notes,drafts,and checks.

Accepted Answer

A) True 
 B)False

Question 10

Which kind of instrument names a specific payee?

Accepted Answer

A)  Payor
B)  Transactional
C)  Demand
D)  Bearer
E)  OrderF) A) and B)
G) B) and C)

Question 11

[Book Payment] Hye and Pat signed a contract providing that "Pat will furnish the correct used business law book for use in Hye's business law class;and on August 15,2016,Hye promises to pay Pat $50 for the book." Hye took the book and planned to pay Pat.Meanwhile,Pat properly assigned the contract Hye had signed to Jack.When Hye went to class,however,she discovered that the book was the incorrect book.When Jack asked Hye for payment,Hye refused.Hye told Jack that the book was useless to her and that she was not paying either him or Pat anything for it.Jack told Hye 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.Hye did not believe him.Since she was trying to save money on books,she also agreed to buy Dante's U.S.history book for $40.She had an oral agreement with Dante that he would give her the book and that she would pay him in three days.This time Hye got the right book.Dante,in writing,properly assigned the right to the $40 payment to Aris.Aris asked Hye for the money.Hye admitted her agreement with Dante but told Aris that she was not going to pay him because he did not have a negotiable instrument.Hye 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 Jack's claim that he had a negotiable instrument and could collect from Hye?

Accepted Answer

A)  The agreement is not negotiable because it does not contain words of negotiability.
B)  The agreement is not negotiable because the book was the wrong book.
C)  Jack is correct.
D)  The agreement is not negotiable because Jack was not a party to the original contract.
E)  The agreement is not negotiable both because the amount at issue is insufficient to create a negotiable instrument.F) B) and C)
G) B) and E)

Question 12

Which of the following refers to the quality of a negotiable instrument that ensures its longevity?

Accepted Answer

A)  Sustainability
B)  Viability
C)  Movability
D)  Durability
E)  Relative permanenceF) None of the above
G) A) and C)

Question 13

Which of the following is not required for an instrument to be considered negotiable?

Accepted Answer

A)  The instrument must contain an unconditional promise to pay.
B)  The instrument must be signed by the maker or drawer.
C)  The instrument must be payable at any indefinite future time.
D)  The instrument must promise to pay a fixed amount of currency.
E)  The instrument must promise to pay.F) A) and E)
G) B) and E)

Question 14

Which is the correct term for a check accepted by the bank on which it is drawn?

Accepted Answer

A)  Certified check
B)  Cashier's check
C)  Traveler's check
D)  Check certificate
E)  Approved draftF) None of the above
G) A) and E)

Question 15

[Yard Mowing] Sophie agreed to mow Reza's yard once a week for $50 per week throughout the summer.Sophie,however,was having trouble getting her money from Reza.On one occasion,he in handwriting gave her in IOU saying "I,Reza Salehi,owe Sophie Smith $50." A couple of weeks later,Reza did not have the money to pay Sophie what he owed her,and he handwrote the following on a piece of paper and gave it to her: "I,Reza Salehi,promise to pay Sophie Smith or to bearer,the sum of $100 on Monday,July 22,2016." Sophie quit mowing Reza's yard;and,disgusted with Reza,Sophie assigned both documents to Vince.When Vince presented the documents to Reza,Reza refused to pay on the basis that after inspecting the yard,he decided that Sophie was doing a poor job.Vince told him the documents constituted negotiable instruments,but Reza pointed out that he had not signed the documents with his signature at the end.
-Which of the following is true regarding the effect on negotiability of Reza's determination that Sophie did a poor job mowing the yard?

Accepted Answer

A)  Sophie's performance prevents the instruments from being negotiable only if Sophie meets the burden of proof of establishing to the judge by a preponderance of the evidence that she did an acceptable job mowing the yard.
B)  Sophie's performance prevents the instruments from being negotiable only if Sophie meets the burden of proof of establishing to the judge by a preponderance of the evidence that she did an acceptable job mowing the yard and that she did not sign any document agreeing that the instrument would lack negotiability upon Reza's objection.
C)  Sophie's performance prevents the instruments from being negotiable only if Reza meets the burden of proof of establishing to the judge by a preponderance of the evidence that Sophie did a poor job mowing the yard,and if Sophie signed and provided to Reza a document agreeing that the instrument would lack negotiability unless she properly performed.
D)  Manner of performance is not one of the listed elements for a finding of negotiability.
E)  Sophie's performance prevents the instruments from being negotiable only if Reza meets the burden of proof of establishing to the judge by a preponderance of the evidence that Sophie did a poor job mowing the yard.F) B) and D)
G) C) and D)

Question 16

Which is the original generic term for the documents used as payments to facilitate commercial transactions?

Accepted Answer

A)  Payment notes
B)  Commercial paper
C)  Commerce notes
D)  Negotiable instruments
E)  Promissory paperF) C) and E)
G) C) and D)

Question 17

Which of the following instruments satisfies the requirements of negotiability?

Accepted Answer

A)  An instrument that states,"payment is to be made 10 days after delivery of the goods" but fails to indicate when delivery is to be made.
B)  An instrument that states,"payment is to be made at some future time after above date."
C)  An instrument that states,"an extension for payment is allowable" but fails to state a fixed time for payment.
D)  An instrument that states,"payment shall be in the form of stock."
E)  An instrument that states,"this contract was created for the purpose of being transferred."F) A) and B)
G) A) and C)

Question 18

Which of the following is true regarding Hye's assertion that Aris did not have a negotiable instrument?

Accepted Answer

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

Question 19

A certificate of deposit is a ________ of the bank.

Accepted Answer

A)  novation
B)  promissory contract
C)  draft
D)  note
E)  checkF) C) and D)
G) B) and D)

Question 20

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

Accepted Answer

A)  Commerce notes
B)  Payment notes
C)  Commercial paper
D)  Negotiable instruments
E)  Commerce paperF) A) and E)
G) A) and B)

Exam 26: Negotiable Instruments: Negotiability and Transferability

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

Correct Answer
verified

Article 3 of the UCC recognizes three types of negotiable instruments: notes,drafts,and checks.

Correct Answer
verified

Provide the definition of a traveler's check.

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

Which is the correct term for a check accepted by the bank on which it is drawn?

Correct Answer
verified

Correct Answer
verified

Which of the following terms 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 not required for an instrument to be considered negotiable?

Correct Answer
verified

Acceptable words of negotiability include the words "pay to cash."

Correct Answer
verified

Which kind of instrument names a specific payee?

Correct Answer
verified

Which is the original generic term for the documents used as payments to facilitate commercial transactions?

Correct Answer
verified

Which of the following is false regarding the UCC's signature requirement for a negotiable instrument?

Correct Answer
verified

Which of the following is known as a substitute for cash?

Correct Answer
verified

Which of the following is true regarding Hye's assertion that Aris did not have a negotiable instrument?

Correct Answer
verified

Which of the following instruments satisfies the requirements of negotiability?

Correct Answer
verified

An instrument fails to be negotiable because it states,"payment will be made by $100 and a rare antique vase." Which of the following scenarios would render the instrument negotiable?

Correct Answer
verified

Correct Answer
verified

For an instrument to be negotiable,the instrument must indicate that it was created for the purpose of being ________.

Correct Answer
verified

A certificate of deposit is a ________ of the bank.

Correct Answer
verified

A contract that is personal or nonassignable cannot be classified as commercial paper.

Correct Answer
verified

Which of the following refers to the quality of a negotiable instrument that ensures its longevity?

Correct Answer
verified

Exam 26: Negotiable Instruments: Negotiability and Transferability

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

Correct AnswerverifiedShow Answer

Article 3 of the UCC recognizes three types of negotiable instruments: notes,drafts,and checks.

Correct AnswerverifiedShow Answer

Provide the definition of a traveler's check.

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

Which is the correct term for a check accepted by the bank on which it is drawn?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following terms 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 not required for an instrument to be considered negotiable?

Correct AnswerverifiedShow Answer

Acceptable words of negotiability include the words "pay to cash."

Correct AnswerverifiedShow Answer

Which kind of instrument names a specific payee?

Correct AnswerverifiedShow Answer

Which is the original generic term for the documents used as payments to facilitate commercial transactions?

Correct AnswerverifiedShow Answer

Which of the following is false regarding the UCC's signature requirement for a negotiable instrument?

Correct AnswerverifiedShow Answer

Which of the following is known as a substitute for cash?

Correct AnswerverifiedShow Answer

Which of the following is true regarding Hye's assertion that Aris did not have a negotiable instrument?

Correct AnswerverifiedShow Answer

Which of the following instruments satisfies the requirements of negotiability?

Correct AnswerverifiedShow Answer

An instrument fails to be negotiable because it states,"payment will be made by $100 and a rare antique vase." Which of the following scenarios would render the instrument negotiable?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

For an instrument to be negotiable,the instrument must indicate that it was created for the purpose of being ________.

Correct AnswerverifiedShow Answer

A certificate of deposit is a ________ of the bank.

Correct AnswerverifiedShow Answer

A contract that is personal or nonassignable cannot be classified as commercial paper.

Correct AnswerverifiedShow Answer

Which of the following refers to the quality of a negotiable instrument that ensures its longevity?

Correct AnswerverifiedShow Answer

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