Question 1

An endorsement that is either the payee's or the last endorsee's signature,payable to whoever has possession of the instrument,is which type of endorsement?

Accepted Answer

A)  Restrictive.
B)  Blank unqualified.
C)  Special unqualified.
D)  Special qualified.
E)  Blank qualified.F) C) and D)
G) None of the above

Question 2

Which of the following is the correct term for a person receiving an endorsement?

Accepted Answer

A)  Endorser
B)  Transferor
C)  Endorsee
D)  Transferee
E)  AllongeF) D) and E)
G) A) and E)

Question 3

When is a time instrument not considered overdue?

Accepted Answer

A)  A time instrument is always overdue upon any missed payment.
B)  When a party misses an installment payment on the principal.
C)  When a party misses an interest payment on the instrument.
D)  When a party fails to make a lump-sum payment by the due date.
E)  When a party does not make payment on either the principal or interest.F) A) and E)
G) A) and C)

Question 4

Which of the following is a version of a qualified endorsement?

Accepted Answer

A)  Special and allonge,but not blank.
B)  Blank,special,and allonge.
C)  Special and blank,but not allonge.
D)  Blank and allonge,but not special.
E)  There are no qualified endorsements.F) B) and E)
G) B) and C)

Question 5

In Southwest Bank,the case in the text in which an employee of the plaintiff fraudulently deposited into her personal account at the defending bank checks for which the plaintiff was payee.The plaintiff sued the defending bank for checks endorsed by the employee "for deposit only" and with no endorsement from the plaintiff.Which of the following was the result in this case?

Accepted Answer

A)  The court ruled that because employee fraud was involved,the defending bank held no responsibility to the plaintiff.
B)  The court ruled that because a fraud was involved,regardless of whether or not it was on the part of plaintiff's employee,the defending bank held no responsibility to the plaintiff.
C)  The court ruled that because the defending bank was merely the depositary bank,it held no responsibility to the plaintiff.
D)  The court ruled that the defending bank was liable to the plaintiff.
E)  The court ruled that the defending bank was entitled to assume that the depositor was entitled to deposit the checks.F) A) and B)
G) B) and D)

Question 6

[Check Issues] Kelsey owns and operates a currency exchange.A regular customer,Rafe,comes in and cashes a $2,000 check issued by ABC Trucking.The day after Kelsey cashed the check,she received a notice from ABC Trucking that some checks had been stolen.It was later discovered that the checks she cashed for Rafe had been stolen.At the time she took the check,Kelsey was very busy with several customers in line.She simply glanced at the check and cashed it.A reasonable examination would have revealed that the check had been materially altered and changed from the amount of $200 to $2,000.Kelsey decided that she needed to hire some people to help her because she also had a problem with another check.On the same day that she took Rafe's check,she took a check from another customer,Brett.It was later discovered that the check,which was four months old,was the subject of a dispute between Brett and the issuer of the check for whom Brett had done some work.The issuer claimed that the work was improperly done.Both ABC Trucking and the issuer of the check to Brett had stopped payment on the checks.Kelsey claimed that as a holder in due course,she was entitled to payment on both checks.
-What is the effect of Kelsey receiving notice the day after she cashed the check for Rafe that the check had been stolen?

Accepted Answer

A)  The notice prevents her from being a holder in due course only if Rafe had been convicted of check cashing offenses in the past since she should have checked his criminal record.
B)  The notice has no effect on her status as holder in due course because it was provided after she cashed the check.
C)  The notice prevents her from being a holder in due course because it was presented to a business;only individuals can avoid the effect of notice of theft by cashing a check prior to receiving notice.
D)  The notice prevents her from being a holder in due course only if she subjectively knew that Rafe had been charged criminally with check cashing violations in the past.
E)  The notice prevents her from being a holder in due course.F) All of the above
G) A) and D)

Question 7

For negotiation,which of the following types of paper require delivery and an endorsement by the holder?

Accepted Answer

A)  Bearer
B)  Transfer
C)  Acknowledgement
D)  Delivery
E)  OrderF) B) and C)
G) All of the above

Question 8

Which of the following is false regarding the elements a party must meet in order to be considered a holder in due course?

Accepted Answer

A)  The party must be a holder of a complete and authentic negotiable instrument.
B)  The holder must take the instrument without notice of defects.
C)  The holder must take the instrument for value.
D)  The holder must either pay for the instrument or receive it as a gift.
E)  The holder must take the instrument in good faith.F) None of the above
G) C) and D)

Question 9

Under which of the following circumstances does a holder taking an instrument for value not become a holder in due course?

Accepted Answer

A)  If the holder purchases the instrument at a judicial sale or under legal process.
B)  If the holder takes the instrument for payment of a preceding claim.
C)  If the holder exchanges the instrument for an irrevocable obligation to a third party.
D)  If the holder performs the promise for which the instrument was issued.
E)  If the holder acquires a security interest or some other lien in the instrument.F) A) and D)
G) A) and E)

Question 10

In order for a holder to acquire the rights and privileges of an HDC,an instrument must be transferred directly from the HDC to the holder.

Accepted Answer

A) True 
 B)False

Question 11

[House Painting] Graciela Reyes signed a check agreeing to pay,"Annie Greene,Marney Harris," $1,000.The payment was for painting her house.A problem with the note was that it spelled Annie's last name,"Greene," whereas Annie spells it simply,"Green." Annie and Marney were having a disagreement regarding how to split up the funds for painting the house.Annie proceeded to sign the check on the back,"Annie Green," and presented it to Hiro Murakami to satisfy a debt that she owed him.Hiro Murakami endorsed the check on the back,"Hiro Murakami,without recourse," and gave it to his nephew,Nate,who took it to the bank for payment.Meanwhile,Graciela has stopped payment on the check because,following a rainstorm,all the paint on the house looked spotted.Marney is unhappy because she did not obtain any of the funds and stated that Annie could not legally endorse the instrument because it misspelled her name and also because she,Marney,did not sign it.
-Which of the following is true regarding Marney's claim that the endorsement by Annie was illegal because the note misspelled Annie's name?

Accepted Answer

A)  Marney is correct.
B)  Marney is correct,but only because two payees are listed.
C)  Marney is incorrect.
D)  Marney is correct,but only because Annie signed the note,"Green," instead of "Greene," as such was on the note.
E)  Marney is incorrect unless she can prove that Graciela intentionally and purposefully spelled the name wrong to prevent negotiation.F) C) and D)
G) B) and D)

Question 12

A holder in due course may be subject to which the following defenses?

Accepted Answer

A)  Duress.
B)  Forgery.
C)  Fraud in the inducement in the underlying contract.
D)  Unauthorized completion of the instrument.
E)  Lack of consideration.F) A) and B)
G) A) and C)

Question 13

Discuss whether or not you believe that our law should recognize holder in due course status with its resulting rights.

Accepted Answer

Student responses will vary.Wh...

Question 14

One who possesses a cashier's check payable from him to someone else is which of the following?

Accepted Answer

A)  Endorser.
B)  Bearer.
C)  Holder in due course.
D)  Holder.
E)  Possessor.F) None of the above
G) C) and D)

Question 15

Which statement is true regarding the status of Nate?

Accepted Answer

A)  He is not a holder nor is he a holder in due course because he did not provide value.
B)  He is not a holder in due course because he did not provide value.
C)  The fact that a gift was involved does not prevent Nate from being a holder in due course so long as other requirements are satisfied.
D)  The fact that a gift was involved does not prevent Nate from being a holder in due course so long as other requirements are satisfied and Nate is not a minor.
E)  He is not a holder because he did not provide value.F) C) and E)
G) A) and B)

Question 16

A bank has given value for a negotiable instrument to the extent that the bank has a security interest in the instrument.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is true regarding the concept of negotiable instruments in Japan?

Accepted Answer

A)  The Japanese Commercial Code recognizes the term negotiable instruments.
B)  Japanese law does not regulate investment securities.
C)  The law governing securities in Japan is technical with little ambiguity or arbitrary application.
D)  The Japanese have a single legislative act governing both commercial paper and investment securities.
E)  The Japanese recognize the legal concept of yuka shoken,which means "valuable securities."F) A) and B)
G) C) and D)

Question 18

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Accepted Answer

A)  An acknowledged instrument.
B)  A delivered instrument.
C)  A contract instrument.
D)  A negotiable instrument.
E)  A holder instrument.F) B) and D)
G) All of the above

Question 19

An instrument that reads,"Pay to the order of Jones or Green," is payable to ________ payees.

Accepted Answer

A)  Consecutive
B)  Joint
C)  Alternate
D)  Concurrent
E)  AlternativeF) A) and D)
G) C) and D)

Question 20

Which of the following is the principle that if an item is transferred from one person to another,the transferee acquires all the rights the transferor had in the item?

Accepted Answer

A)  The shelter principle.
B)  The holder principle.
C)  The transfer principle.
D)  The transferee principle.
E)  The transferor principle.F) A) and E)
G) C) and D)

Exam 27: Negotiation, holder in Due Course, and Defenses

An endorsement that is either the payee's or the last endorsee's signature,payable to whoever has possession of the instrument,is which type of endorsement?

Correct Answer
verified

Which of the following is the principle that if an item is transferred from one person to another,the transferee acquires all the rights the transferor had in the item?

Correct Answer
verified

Which statement is true regarding the status of Nate?

Correct Answer
verified

When is a time instrument not considered overdue?

Correct Answer
verified

Correct Answer
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Which of the following is the correct term for a person receiving an endorsement?

Correct Answer
verified

A holder in due course may be subject to which the following defenses?

Correct Answer
verified

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Correct Answer
verified

For negotiation,which of the following types of paper require delivery and an endorsement by the holder?

Correct Answer
verified

In order for a holder to acquire the rights and privileges of an HDC,an instrument must be transferred directly from the HDC to the holder.

Correct Answer
verified

Under which of the following circumstances does a holder taking an instrument for value not become a holder in due course?

Correct Answer
verified

One who possesses a cashier's check payable from him to someone else is which of the following?

Correct Answer
verified

A bank has given value for a negotiable instrument to the extent that the bank has a security interest in the instrument.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Discuss whether or not you believe that our law should recognize holder in due course status with its resulting rights.

Correct Answer
verified
Student responses will vary.Wh...
View Answer

Which of the following is true regarding the concept of negotiable instruments in Japan?

Correct Answer
verified

Which of the following is a version of a qualified endorsement?

Correct Answer
verified

Which of the following is false regarding the elements a party must meet in order to be considered a holder in due course?

Correct Answer
verified

An instrument that reads,"Pay to the order of Jones or Green," is payable to ________ payees.

Correct Answer
verified

Exam 27: Negotiation, holder in Due Course, and Defenses

An endorsement that is either the payee's or the last endorsee's signature,payable to whoever has possession of the instrument,is which type of endorsement?

Correct AnswerverifiedShow Answer

Which of the following is the principle that if an item is transferred from one person to another,the transferee acquires all the rights the transferor had in the item?

Correct AnswerverifiedShow Answer

Which statement is true regarding the status of Nate?

Correct AnswerverifiedShow Answer

When is a time instrument not considered overdue?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is the correct term for a person receiving an endorsement?

Correct AnswerverifiedShow Answer

A holder in due course may be subject to which the following defenses?

Correct AnswerverifiedShow Answer

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Correct AnswerverifiedShow Answer

For negotiation,which of the following types of paper require delivery and an endorsement by the holder?

Correct AnswerverifiedShow Answer

In order for a holder to acquire the rights and privileges of an HDC,an instrument must be transferred directly from the HDC to the holder.

Correct AnswerverifiedShow Answer

Under which of the following circumstances does a holder taking an instrument for value not become a holder in due course?

Correct AnswerverifiedShow Answer

One who possesses a cashier's check payable from him to someone else is which of the following?

Correct AnswerverifiedShow Answer

A bank has given value for a negotiable instrument to the extent that the bank has a security interest in the instrument.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Discuss whether or not you believe that our law should recognize holder in due course status with its resulting rights.

Correct AnswerverifiedStudent responses will vary.Wh...View AnswerShow Answer

Which of the following is true regarding the concept of negotiable instruments in Japan?

Correct AnswerverifiedShow Answer

Which of the following is a version of a qualified endorsement?

Correct AnswerverifiedShow Answer

Which of the following is false regarding the elements a party must meet in order to be considered a holder in due course?

Correct AnswerverifiedShow Answer

An instrument that reads,"Pay to the order of Jones or Green," is payable to ________ payees.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
Student responses will vary.Wh...
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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