Question 1

[Roommate Troubles] Dexter,Bernard,and Garren were roommates who do not get along and decide to go their separate ways when their lease expires on May 31.Dexter owes Bernard $500 and signs a promissory note that he will pay Bernard $500 by July 1.Bernard,who owes Garren money,endorses the back of the note and writes "Pay to the order of Garren" on the back and gives the note to Garren.On July 2,Garren tells Dexter that Bernard signed the promissory note to him,so Dexter should just pay Garren the $500.Dexter refuses to pay Garren anything.Garren then tells Bernard that Dexter dishonored the note and sues Bernard for the value of the note.
-Who is primarily liable on the promissory note and who is secondarily liable?

Accepted Answer

A)  Both Dexter and Bernard are primarily liable on the note.
B)  Dexter is primarily liable and Bernard is secondarily liable.
C)  Bernard is primarily liable and Garren is secondarily liable.
D)  Dexter is primarily liable and Garren is secondarily liable.
E)  Bernard is primarily liable and Dexter is secondarily liable.F) A) and C)
G) D) and E)

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 the most likely result if Rohan refuses payment on the promissory note that was endorsed to Miguel claiming that he never signed it?

Accepted Answer

A)  He will be liable unless he can establish that Miguel was not a holder in due course.
B)  He will be liable because an official banking document was involved.
C)  He can claim fraud in the inducement,and he will not be liable regardless of whether or not he knew what he was signing.
D)  He will not be liable because a party is never liable on a negotiable instrument when it is signed without knowledge that it is,in fact,a negotiable instrument.
E)  He can claim fraud in the factum,and whether he is liable or not will depend upon whether a court determines that he should have known what he was signing.F) C) and E)
G) B) and E)

Question 3

Which of the following is true regarding what is considered a commercially reasonable manner by which notice of dishonor may be given to a secondarily liable party?

Accepted Answer

A)  The only commercially reasonable manner recognized by the UCC for notice of dishonor is written mail.
B)  The only commercially reasonable manner for notice of dishonor recognized by the UCC is certified mail.
C)  Due to advances in technology,the only commercially reasonable manner recognized by the UCC for notice of dishonor is electronic communication.
D)  The UCC recognizes two manners of delivery for notice of dishonor that are considered commercially reasonable: written and electronic.
E)  The UCC recognizes that oral,written,and electronic communications are all commercially reasonable ways in which to provide notice of dishonor.F) A) and E)
G) C) and E)

Question 4

Which of the following is false regarding the means by which an instrument may be cancelled by a person entitled to enforce it?

Accepted Answer

A)  A party may cancel an instrument by intentionally mutilating the instrument.
B)  Consideration is necessary before a cancellation,a form of contractual agreement,is effective.
C)  A party may cancel an instrument by simply writing "paid" on the instrument.
D)  A party may cancel an instrument by intentionally destroying the instrument.
E)  A party may cancel an instrument by giving the instrument to the obliged party.F) A) and B)
G) C) and D)

Question 5

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

Accepted Answer

A)  Discharged
B)  Delivered
C)  Released
D)  Abrogated
E)  TerminatedF) B) and D)
G) A) and E)

Question 6

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 7

Assuming there is proper presentment and notice of dishonor,can Bernard be held liable on the promissory note?

Accepted Answer

A)  Garren has no recourse since he is not a holder in due course.
B)  No,only Dexter can be held liable.
C)  Yes,and he can sue Dexter who is primarily liable for the note.
D)  No,because he is not primarily liable.
E)  Yes,but he has no recourse against Dexter.F) B) and C)
G) B) and D)

Question 8

Which statement is true regarding types of warranty liability?

Accepted Answer

A)  There are two types of warranties in regard to instruments,transfer and presentment.
B)  There is only one type of warranty in regard to instruments,transfer.
C)  There is only one type of warranty in regard to instruments,presentment.
D)  There are three types of warranties in regard to instruments,transfer,presentment,and acknowledged.
E)  There is only one type of warranty in regard to instruments,acknowledged.F) None of the above
G) A) and B)

Question 9

List the five items that a party warrants when the party transfers an instrument for consideration.

Accepted Answer

When a party transfe...

Question 10

If Teren sends Clem a letter,telling Clem he will not sue to enforce a promissory note,Clem's liability under the note has been discharged.

Accepted Answer

A) True 
 B)False

Exam 28: Liability, defenses, and Discharge

Correct Answer
verified

Assuming there is proper presentment and notice of dishonor,can Bernard be held liable on the promissory note?

Correct Answer
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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
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Which of the following is false regarding the means by which an instrument may be cancelled by a person entitled to enforce it?

Correct Answer
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Which of the following is true regarding what is considered a commercially reasonable manner by which notice of dishonor may be given to a secondarily liable party?

Correct Answer
verified

List the five items that a party warrants when the party transfers an instrument for consideration.

Correct Answer
verified
When a party transfe...
View Answer

Which statement is true regarding types of warranty liability?

Correct Answer
verified

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

Correct Answer
verified

If Teren sends Clem a letter,telling Clem he will not sue to enforce a promissory note,Clem's liability under the note has been discharged.

Correct Answer
verified

Exam 28: Liability, defenses, and Discharge

Correct AnswerverifiedShow Answer

Assuming there is proper presentment and notice of dishonor,can Bernard be held liable on the promissory note?

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

Which of the following is false regarding the means by which an instrument may be cancelled by a person entitled to enforce it?

Correct AnswerverifiedShow Answer

Which of the following is true regarding what is considered a commercially reasonable manner by which notice of dishonor may be given to a secondarily liable party?

Correct AnswerverifiedShow Answer

List the five items that a party warrants when the party transfers an instrument for consideration.

Correct AnswerverifiedWhen a party transfe...View AnswerShow Answer

Which statement is true regarding types of warranty liability?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If Teren sends Clem a letter,telling Clem he will not sue to enforce a promissory note,Clem's liability under the note has been discharged.

Correct AnswerverifiedShow 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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When a party transfe...
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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