Question 1

The type of liability that occurs based on a person signing a negotiable instrument is referred to as which of the following?

Accepted Answer

A)   Warranty liability
B)   Payee liability
C)   Signature liability
D)   Primary liability
E)   Secondary liabilityF) None of the above
G) A) and B)

Question 2

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 3

Which of the following person signs an instrument to restrict payment of it,negotiate it,or incur liability?

Accepted Answer

A)   Maker
B)   Acceptor
C)   Drawer
D)   Endorser
E)   PromisorF) None of the above
G) B) and C)

Question 4

Which of the following occurs when a former holder of an instrument has the instrument transferred back to him or her by negotiation or other means?

Accepted Answer

A)   Cancellation
B)   Renunciation
C)   Reacquisition
D)   Recourse
E)   ReleaseF) B) and D)
G) C) and E)

Question 5

When a party signs a negotiable instrument,which of the following is true regarding the position of that party?

Accepted Answer

A)   The party may be a maker or acceptor, but not a drawer or an endorser.
B)   The party may be a maker, acceptor, or drawer, but not an endorser.
C)   The party may be a drawer or maker, but not an acceptor or an endorser.
D)   The party may be a maker, drawer, or endorser, but not an acceptor.
E)   The party may be a drawer, maker, endorser, or acceptor.F) A) and D)
G) A) and C) E

Question 6

Which of the following is the most likely result of Betty's request that Doreen pay the amount due on the check?

Accepted Answer

A)   It is likely that Doreen will have to pay the check as a secondarily liable party.
B)   It is unlikely that Doreen will have to pay on the check because the UCC states that a check must be presented within 60 days in order to hold a drawer secondarily liable.
C)   It is unlikely that Doreen will have to pay on the check because the UCC states that a check must be presented within 30 days in order to hold a drawer secondarily liable.
D)   It is unlikely that Doreen will have to pay on the check because the UCC states that a check must be presented within 20 days in order to hold a drawer secondarily liable.
E)   It is unlikely that Doreen will have to pay on the check because the UCC states that a check must be presented within 10 days in order to hold a drawer secondarily liable.F) B) and E)
G) All of the above

Question 7

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

Accepted Answer

When a party transfers an instrument for...

Question 8

In order for the principal to be held liable when an agent signs a note on behalf of the principal,the principal's name must be shown on the instrument.

Accepted Answer

A) True 
 B)False  False

Question 9

According to the UCC,a signature can be any name,word,mark,or symbol used by a party to authenticate a writing.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A)   Consideration is necessary before a cancellation, a form of contractual agreement, is effective.
B)   A party may cancel an instrument by simply writing "paid" on the instrument.
C)   A party may cancel an instrument by intentionally destroying the instrument.
D)   A party may cancel an instrument by intentionally mutilating the instrument.
E)   A party may cancel an instrument by giving the instrument to the obliged party.F) None of the above
G) A) and B)

Question 11

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

Accepted Answer

A)   When Doreen presented the check to Hot Dresses Inc.
B)   When Betty took the check to ABC Bank.
C)   When ABC Bank requested payment from XYZ Bank.
D)   When XYZ Bank notified Betty that it would not pay based upon insufficient funds.
E)   When Betty requested that Doreen make the check good.F) C) and E)
G) D) and E)

Question 12

If the party that dishonors an instrument is a collecting bank,when must notice of the dishonor be given to a secondarily liable party by the collecting bank?

Accepted Answer

A)   Before midnight of the next day
B)   Within 48 hours
C)   Within 7 days
D)   Within 10 days
E)   Within 30 daysF) B) and E)
G) D) and E) A

Question 13

Which of the following is true regarding when,and if,the note was initially dishonored?

Accepted Answer

A)   The note has never been dishonored because Henry's right to receive payment on the note from someone is acknowledged.
B)   Millie initially dishonored the instrument when she asked for proper identification.
C)   Millie initially dishonored the instrument when she refused to pay it on the basis that she lacked funds with which to do so.
D)   The note was not dishonored until Anne told Henry that he would have to seek recovery from Bob.
E)   The note was considered initially dishonored 30 days after Henry started seeking Bob, but was unable to find him.F) A) and B)
G) A) and C)

Question 14

Which of the following is a type of liability arising on an instrument when the transfer of the instrument breaches a warranty associated with the instrument?

Accepted Answer

A)   Warranty liability
B)   Payee liability
C)   Signature liability
D)   Primary liability
E)   Secondary liabilityF) B) and C)
G) C) and E)

Question 15

Zachary,who has been authorized to write a check from a company account to pay employees,draws bonus checks from the company account for five fictitious employees,endorses the checks in their names,and deposits those into his own bank account.Which of the following is true regarding whether the company will be required to take the loss on the checks?

Accepted Answer

A)   Under the fictitious payee rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
B)   Under the imposter rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
C)   Under the transferor rule, the company will be required to take the loss on the checks unless the company can obtain the funds from Zachary.
D)   Under the employee-liability rule, in addition to its rights in regard to Zachary, the company will be able to recover from any bank that cashed the checks.
E)   Under the banking liability act, in addition to its rights in regard to Zachary, the company will be able to recover from any bank that cashed the checks.F) A) and B)
G) A) and C)

Question 16

Barry wrote a check drawn on his account at ABC Bank for $500 made out to Susie Smith for payment for yard work.Barry put the check properly addressed to Susie in the U.S.mail.Through unknown means,a thief obtained the check.The thief altered the name of the payee to Trudy Smith,and through expertly forged documents opened an account at XYZ Bank and obtained the funds from Barry's check along with a number of other stolen checks.When the check was then presented to ABC Bank for payment,ABC Bank charged Barry's account in the amount of $500.A few days later,Susie asked Barry for her money; and,after investigating,he became aware of the situation.Assuming the court follows the reasoning of the case in the text,Halliburton Energy Services Inc.,v.Fleet National Bank,which of the following is true regarding whether Barry is entitled to a return of his funds?

Accepted Answer

A)   As a matter of law, the presenting bank is charged with notice of forgeries; therefore, XYZ must take the loss, and Barry is entitled to a return of his funds.
B)   That Susie, the payee, bore a risk of loss and that, although Barry is not entitled to return of the funds, his debt to Susie is discharged.
C)   That Barry is entitled to a return of only ½ of the funds because in such cases, the collecting bank, XYZ Bank, and the drawer, Barry, must share the loss.
D)   That Barry is entitled to a return of the funds only if he can establish that he notified ABC Bank of the problem within 30 days of receiving the bank statement showing the alteration.
E)   That Barry is entitled to a refund only if he can establish that XYZ Bank failed to exercise ordinary care in taking the instrument.F) A) and C)
G) A) and E)

Question 17

Who among the following was the holder of the check?

Accepted Answer

A)   Doreen
B)   Hot Dresses Inc.
C)   Doreen's bank
D)   Betty's bank
E)   There is no holder in this instanceF) D) and E)
G) A) and E)

Question 18

Which of the following is true regarding how an accommodation party may sign an instrument?

Accepted Answer

A)   An accommodation party may sign an instrument only as a maker.
B)   An accommodation party may sign an instrument only as a maker or a drawer.
C)   An accommodation party may sign an instrument only as a maker or acceptor.
D)   An accommodation party may sign an instrument only as an endorser or acceptor.
E)   An accommodation party may sign an instrument as a maker, drawer, acceptor, or endorser.F) A) and D)
G) B) and E)

Question 19

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

Accepted Answer

A)   Terminated
B)   Released
C)   Discharged
D)   Abrogated
E)   DeliveredF) B) and D)
G) All of the above

Question 20

If an accommodation party pays a note for an accommodated party,the accommodation party has a right of action against the accommodated party to recover the money paid.

Accepted Answer

A) True 
 B)False

Exam 28: Liability,defenses,and Discharge

The type of liability that occurs based on a person signing a negotiable instrument is referred to as which of the following?

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

Which of the following person signs an instrument to restrict payment of it,negotiate it,or incur liability?

Correct Answer
verified

Which of the following occurs when a former holder of an instrument has the instrument transferred back to him or her by negotiation or other means?

Correct Answer
verified

When a party signs a negotiable instrument,which of the following is true regarding the position of that party?

Correct Answer
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E

Which of the following is the most likely result of Betty's request that Doreen pay the amount due on the check?

Correct Answer
verified

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

Correct Answer
verified
When a party transfers an instrument for...
View Answer

In order for the principal to be held liable when an agent signs a note on behalf of the principal,the principal's name must be shown on the instrument.

Correct Answer
verified
False

According to the UCC,a signature can be any name,word,mark,or symbol used by a party to authenticate a writing.

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

If the party that dishonors an instrument is a collecting bank,when must notice of the dishonor be given to a secondarily liable party by the collecting bank?

Correct Answer
verified
A

Which of the following is true regarding when,and if,the note was initially dishonored?

Correct Answer
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Which of the following is a type of liability arising on an instrument when the transfer of the instrument breaches a warranty associated with the instrument?

Correct Answer
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Correct Answer
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Who among the following was the holder of the check?

Correct Answer
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Which of the following is true regarding how an accommodation party may sign an instrument?

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
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If an accommodation party pays a note for an accommodated party,the accommodation party has a right of action against the accommodated party to recover the money paid.

Correct Answer
verified

Exam 28: Liability,defenses,and Discharge

The type of liability that occurs based on a person signing a negotiable instrument is referred to as which of the following?

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

Which of the following person signs an instrument to restrict payment of it,negotiate it,or incur liability?

Correct AnswerverifiedShow Answer

Which of the following occurs when a former holder of an instrument has the instrument transferred back to him or her by negotiation or other means?

Correct AnswerverifiedShow Answer

When a party signs a negotiable instrument,which of the following is true regarding the position of that party?

Correct AnswerverifiedE

Which of the following is the most likely result of Betty's request that Doreen pay the amount due on the check?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedWhen a party transfers an instrument for...View AnswerShow Answer

In order for the principal to be held liable when an agent signs a note on behalf of the principal,the principal's name must be shown on the instrument.

Correct AnswerverifiedFalse

According to the UCC,a signature can be any name,word,mark,or symbol used by a party to authenticate a writing.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the party that dishonors an instrument is a collecting bank,when must notice of the dishonor be given to a secondarily liable party by the collecting bank?

Correct AnswerverifiedA

Which of the following is true regarding when,and if,the note was initially dishonored?

Correct AnswerverifiedShow Answer

Which of the following is a type of liability arising on an instrument when the transfer of the instrument breaches a warranty associated with the instrument?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Who among the following was the holder of the check?

Correct AnswerverifiedShow Answer

Which of the following is true regarding how an accommodation party may sign an instrument?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If an accommodation party pays a note for an accommodated party,the accommodation party has a right of action against the accommodated party to recover the money paid.

Correct AnswerverifiedShow Answer

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

Correct Answer
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Correct Answer
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Correct Answer
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E

Correct Answer
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Correct Answer
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When a party transfers an instrument for...
View Answer

Correct Answer
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False

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A

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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