FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 25: Creating a Negotiable Instrument

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

In June, The Seascape Gallery sells an oil painting to Collegiate Systems, Inc. Collegiate promises to pay for the painting in three months. The gallery prepares a draft ordering Collegiate Systems to pay $3,000 to First Bank on September 15. Collegiate Systems signs the draft. The draft is a

A) sight draft.
B) time draft.
C) trade draft.
D) future draft.

E) A) and B)
F) All of the above

Correct Answer

verified

Show Answer

Question 2

True/False

Review LaterAdd Note

Review Later

Personal and real defenses are valid against an ordinary holder; only real defenses can be used against a holder in due course.

A) True
B) False

Correct Answer

verified

True

Question 3

True/False

Review LaterAdd Note

​There are three parties on a promissory note: the maker, the drawee, and the payee.

Matt wrote a $500 check to Alistar for some yard work that Alistar had done. What will Alistar have to do negotiate this instrument to Totally Tough, Inc. in payment for some yard equipment Alistar had bought?

Under the UCC, a holder in due course is a holder who has given value for the instrument. Which of the following holders have given value for the instrument?

Which statement about notes and drafts is accurate?

A draft is always a check, but a check is not always a draft.

Commercial paper is a contract to pay money.

Valley National Bank issued a note promising to repay an investor on October 1, 2011, three years from the date of issue, plus interest. The note

On March 1 Donna wrote a check for $296 to Sun Services. When will the check be overdue? What is the effect of the check's being overdue? What is the effect if the check is stamped "Insufficient Funds" by Donna's bank?

It was payday. Navidida decided to run some errands and then deposit her check in the bank over her lunch hour. So that she wouldn't have to spend too long at the bank, Navidida indorsed the back of the paycheck as follows, "Navidida Jones," before leaving work. While window shopping, Navidida lost the check. Roger finds Navidida's paycheck. (A)Will Roger be able to cash Navidida's check? (B)How could have Navidida indorsed the check so that she would not have to be concerned about losing the check?

Tim buys a high-powered tool from Binford Tools to use on the construction of his own garage. Binford Tools provides a full warranty on the tool for the first six months. To pay for the tool, Tim signs a negotiable promissory note which contains the FTC Consumer Credit Notice. Binford properly negotiates the note to First Finance. Within three weeks, the tool stops working and Binford refuses to repair or replace it. In the meantime, First Finance demands payment from Tim. Under the Federal Trade Commission rules, this consumer credit situation means First Finance

Maia wrote a check which said, "Pay to the order of Kevin Mathews $10.97." The next line of the check stated, "One thousand ninety-seven Dollars." In applying the rules of interpretation, how much should the drawee pay?

Felicia, an elderly woman, does not speak or read English well. Felicia is a recent immigrant to this country. A dishonest immigration officer tells Felicia to sign several documents as being necessary to maintain her legal immigration status. Unknown to Felicia, she signs a promissory note. The immigration officer thereafter sells the note to Neighborhood Bank, a holder in due course, who goes after Felicia for payment of the note. Felicia's defense to the Neighborhood Bank is

Margo is in possession of a check issued to her by Felix. The check states, "Pay to the order of Margo." If Margo wishes to transfer the check to Pete to pay a debt she owes him, all she needs to do is strike out her name on the front of the check, write in Felix's name, and give it to him.

A "holder" of order paper can be described as

Because negotiable instruments are more valuable than non-negotiable ones, it is important for buyers and sellers to be able to tell, easily and accurately, if an instrument is indeed negotiable. What six standards must an instrument meet in order for it to be negotiable?

Sprock is a holder in due course on an instrument issued by Klingon. Which of the following defenses could be successfully raised by Klingon?

There are two types of commercial paper: express and implied.

In which case would the holder in due course not receive payment?