Question 1

Under the UCC,how can proper presentment be made?

Accepted Answer

A)   By any commercially reasonable means.
B)   Only through a clearinghouse procedure.
C)   Only at a place designated in the instrument.
D)   By any commercially reasonable means, through a clearinghouse procedure, or at a place designated in the instrument.
E)   By any commercially reasonable means or at the place designated in the instrument, but not through a clearinghouse procedure.F) D) and E)
G) A) and B)

Question 2

Which of the following is the general rule when it is not possible to determine the status of the signer of an instrument?

Accepted Answer

A)   The party is considered the maker.
B)   The party is considered the acceptor.
C)   The party is considered the drawer.
D)   The party is considered the endorser.
E)   The party is considered an accommodation party.F) A) and C)
G) A) and E)

Question 3

To hold an endorser secondarily liable on a check,a holder must present a check within ______ days of the endorsement.

Accepted Answer

A)   120
B)   90
C)   60
D)   50
E)   30F) A) and C)
G) C) and E)

Question 4

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account,but the principal does nothing until two months later after the agent leaves town with the funds?

Accepted Answer

A)   Because the checks were forged, the principal can receive reimbursement of the funds from any maker involved or any bank that cashed the checks.
B)   The principal can receive reimbursement from makers of the checks only.
C)   The principal can receive reimbursement from any bank that cashed the checks only.
D)   It is likely that it will be determined that the principal ratified the signatures and that the principal cannot recover from either makers or banks that cashed the checks.
E)   The principal can recover from either the makers or any banks who cashed the checks only if it can be shown that the agent cannot be located for criminal prosecution.F) A) and E)
G) C) and D)

Question 5

Set forth the eight real defenses and explain their significance.

Accepted Answer

Real defenses are as follows:
1.Infancy ...

Question 6

Which of the following is true in the event an instrument contains more than one endorsement?

Accepted Answer

A)   Each endorser is liable for the full amount to the subsequent endorser or to the holder.
B)   Only the last endorser is liable to the holder and no prior endorsers are liable to a subsequent endorser.
C)   Each endorser is liable for the full amount to the subsequent endorser, but only the last endorser is liable to any holder.
D)   The last endorser is liable to the holder, whereas subsequent endorsers are not liable to the holder, but are responsible for reimbursing the last endorser in proportion to the number of endorsers that exist.
E)   Each endorser is liable to the holder in proportion to the number of endorsers that exist.F) C) and D)
G) A) and D)

Question 7

Effie received a check written by Sam whom she did not really trust.Accordingly,she rushed to his bank to get the check cashed.The bank told her that presentment would be considered as being made on the next business day and refused to immediately give her the funds.The bank representative told her that the bank's cut-off hour was 2:00 p.m.and that she did not present the check until 3:00 p.m.Effie was upset and told the bank that it wrongfully dishonored the check in violation of provisions of the UCC.Discuss the rights of the parties.

Accepted Answer

A bank to which presentment is made may ...

Question 8

Who is the drawee of the check Doreen presented to Hot Dresses Inc.,?

Accepted Answer

A)   Doreen
B)   Hot Dresses Inc.
C)   Betty, as primary owner of Hot Dresses Inc.
D)   Doreen's bank
E)   Betty's bankF) A) and B)
G) A) and C)

Question 9

Which of the following was the result on appeal in the Case Opener in which the plaintiff optometrist sued the defending bank for cashing over 500 checks that his receptionist fraudulently embezzled through forging his signature?

Accepted Answer

A)   Because both the plaintiff and the bank were found negligent, the plaintiff was denied recovery.
B)   Because only the bank was found negligent, the plaintiff was denied recovery.
C)   Because both the plaintiff and the bank were found negligent, the plaintiff recovered only 50% of his losses.
D)   Because only the bank was found negligent, the plaintiff was entitled to recover the value of the checks.
E)   Based on public policy, the plaintiff was denied recovery although no negligence was found on the part of either party.F) A) and B)
G) C) and D)

Question 10

Carl,without Eddie's knowledge,impersonates Eddie and thereby convinces Connie,who has never seen Eddie,to write a check to Eddie for upcoming yard work.Carl then forges Eddie's name and deposits the check into his,Carl's,account.Which of the following is true regarding whether Connie will be liable for the amount of the check?

Accepted Answer

A)   Under the forgery rule, Connie will be held liable.
B)   Under the transferor rule, Connie will be held liable.
C)   Under the payee rule, Connie will be held liable.
D)   Under the imposter rule, Connie will be held liable.
E)   Under the fictitious payee rule, Connie will not be held liable.F) B) and D)
G) C) and D)

Question 11

When,if ever,will a party's negligence block a party from escaping liability for an unauthorized signature?

Accepted Answer

A)   Any type of negligence will result in a party being liable for an unauthorized signature.
B)   The issue of negligence will not as a matter of law block a party from escaping liability for an unauthorized signature.
C)   A party who is negligent may not escape liability for an unauthorized signature if the party whose signature was forged behaved so negligently as to substantially contribute to the making of the forgery.
D)   A party's negligence will make the party liable for an unauthorized signature only if the negligence amounts to a finding of recklessness.
E)   A party's negligence will make the party liable for an unauthorized signature only if the negligence rises to the level of gross negligence.F) All of the above
G) C) and E)

Question 12

Which of the following is true regarding the warranty or warranties applicable if an instrument is not an unaccepted draft presented to a drawee?

Accepted Answer

A)   Only one warranty applies, that the warrantor of the instrument is or was entitled to payment or authorized to obtain payment.
B)   Only one warranty applies, that the instrument has not been altered.
C)   Only one warranty applies, that the warrantor has no knowledge that the drawer's signature or the draft is unauthorized.
D)   Two warranties are applicable: (1)  that the instrument has not been altered, and (2)  that the warrantor has no knowledge that the drawer's signature or the draft is unauthorized.
E)   Three warranties are applicable: (1)  that the instrument has not been altered, (2)  that the warrantor has no knowledge that the drawer's signature or the draft is unauthorized, and (3)  that the warrantor of the instrument is or was entitled to payment or authorized to obtain payment.F) B) and D)
G) B) and E)

Question 13

Assuming that Henry admits the modification but it is not considered fraudulent,which of the following is true regarding Taylor's liability on the note?

Accepted Answer

A)   Because of the alteration, Taylor is not liable for any amounts under the promissory note.
B)   Taylor's obligation will be enforced only to the amount of $3,000 if payment is to be made to Henry; but in the event the note is negotiated to another holder, Taylor is liable for $3,500.
C)   Taylor's obligation will be enforced only to the amount of $3,000 if payment is to be made to Henry; but in the event the note is negotiated to a holder in due course, Taylor is liable for $3,500.
D)   Unless Taylor has a written document from Henry to the effect that the agreement was for $3,000 only, Taylor and Henry will be legally required to split the remainder with Taylor being held responsible for $3,250.
E)   Taylor is liable for $3,000 regardless of whether or not Henry has negotiated the note to another party.F) D) and E)
G) C) and E)

Question 14

If a transfer is through endorsement,transfer warranties apply to any future holders; however,if the transfer does not occur through endorsement,the warranties apply only to the transferee.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is true regarding Martha's liability to Henry?

Accepted Answer

A)   Because of the fraudulent alteration, Martha is not liable to Henry for any amounts under the promissory note.
B)   Martha's obligation will be enforced only to the amount of $4,000 if payment is to be made to Henry; but if the note has been negotiated to another holder, Martha is liable for $4,500.
C)   Taylor's obligation will be enforced only to the amount of $3,000 if payment is to be made to Henry; but in the event the note is negotiated to a holder in due course, Taylor is liable for $3,500.
D)   Unless Martha has a written document from Henry to the effect that the agreement was for $4,000 only, Martha and Henry will be legally required to split the remainder with Martha being held responsible for $4,250.
E)   Martha is liable for $4,000 regardless of whether or not Henry has negotiated the note to another party.F) B) and D)
G) A) and B)

Question 16

Which of the following person orders the drawee to pay?

Accepted Answer

A)   Maker
B)   Acceptor
C)   Drawer
D)   Endorser
E)   PromisorF) B) and D)
G) A) and C)

Question 17

Which of the following is true regarding Henry's entitlement to payment from Millie?

Accepted Answer

A)   Henry is only entitled to payment from Millie because Anne dishonored the payment.
B)   Henry is not entitled to payment from Millie unless Bob, in addition to Anne, dishonors the instrument.
C)   Henry is never entitled payment from Millie because he must seek recovery only from Anne.
D)   Henry is entitled to recover on the note from Millie.
E)   Henry is entitled to recover on the note from Millie only if both Anne and Bob have filed bankruptcy or are otherwise proven insolvent.F) C) and D)
G) A) and B)

Question 18

When a party is tricked into signing a negotiable instrument without having a chance to determine that it is,in fact,a negotiable instrument,the party can claim _______.

Accepted Answer

A)   Negligence
B)   Recklessness
C)   Malice
D)   Strict liability
E)   Fraud in the factumF) A) and B)
G) C) and D)

Question 19

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Accepted Answer

A)   A party who has transfer liability.
B)   A party who has acceptor liability.
C)   A party who has maker liability.
D)   A party who has secondary liability.
E)   A party who has recognition liability.F) A) and C)
G) C) and E)

Question 20

Which of the following was the result on appeal in Heartland State Bank v.American Bank & Trust,the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Accepted Answer

A)   That the defending bank had no right to return the check because the check had already gone through the Federal Reserve System.
B)   That the defending bank had no right to return the check because by accepting the check, it became accountable for it.
C)   That the bank had no right to return the check because the check was written by one of its customers.
D)   That the defending bank had until midnight on April 10 in which to return the check and that it, therefore, did not act in a timely manner.
E)   That the defending bank had until midnight on April 11 in which to return the check and that it, therefore, acted in a timely manner in doing so.F) B) and E)
G) A) and B)

Exam 28: Liability,defenses,and Discharge

Which of the following is true in the event an instrument contains more than one endorsement?

Correct Answer
verified

To hold an endorser secondarily liable on a check,a holder must present a check within ______ days of the endorsement.

Correct Answer
verified

Which of the following was the result on appeal in Heartland State Bank v.American Bank & Trust,the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Correct Answer
verified

Set forth the eight real defenses and explain their significance.

Correct Answer
verified
Real defenses are as follows:
1.Infancy ...
View Answer

Correct Answer
verified
A bank to which presentment is made may ...
View Answer

Which of the following is true regarding Martha's liability to Henry?

Correct Answer
verified

When,if ever,will a party's negligence block a party from escaping liability for an unauthorized signature?

Correct Answer
verified

Which of the following person orders the drawee to pay?

Correct Answer
verified

Which of the following is the general rule when it is not possible to determine the status of the signer of an instrument?

Correct Answer
verified

Assuming that Henry admits the modification but it is not considered fraudulent,which of the following is true regarding Taylor's liability on the note?

Correct Answer
verified

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Correct Answer
verified

Who is the drawee of the check Doreen presented to Hot Dresses Inc.,?

Correct Answer
verified

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account,but the principal does nothing until two months later after the agent leaves town with the funds?

Correct Answer
verified

Which of the following is true regarding the warranty or warranties applicable if an instrument is not an unaccepted draft presented to a drawee?

Correct Answer
verified

Correct Answer
verified

Which of the following is true regarding Henry's entitlement to payment from Millie?

Correct Answer
verified

Under the UCC,how can proper presentment be made?

Correct Answer
verified

When a party is tricked into signing a negotiable instrument without having a chance to determine that it is,in fact,a negotiable instrument,the party can claim _______.

Correct Answer
verified

Which of the following was the result on appeal in the Case Opener in which the plaintiff optometrist sued the defending bank for cashing over 500 checks that his receptionist fraudulently embezzled through forging his signature?

Correct Answer
verified

If a transfer is through endorsement,transfer warranties apply to any future holders; however,if the transfer does not occur through endorsement,the warranties apply only to the transferee.

Correct Answer
verified

Exam 28: Liability,defenses,and Discharge

Which of the following is true in the event an instrument contains more than one endorsement?

Correct AnswerverifiedShow Answer

To hold an endorser secondarily liable on a check,a holder must present a check within ______ days of the endorsement.

Correct AnswerverifiedShow Answer

Which of the following was the result on appeal in Heartland State Bank v.American Bank & Trust,the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Correct AnswerverifiedShow Answer

Set forth the eight real defenses and explain their significance.

Correct AnswerverifiedReal defenses are as follows:1.Infancy ...View AnswerShow Answer

Correct AnswerverifiedA bank to which presentment is made may ...View AnswerShow Answer

Which of the following is true regarding Martha's liability to Henry?

Correct AnswerverifiedShow Answer

When,if ever,will a party's negligence block a party from escaping liability for an unauthorized signature?

Correct AnswerverifiedShow Answer

Which of the following person orders the drawee to pay?

Correct AnswerverifiedShow Answer

Which of the following is the general rule when it is not possible to determine the status of the signer of an instrument?

Correct AnswerverifiedShow Answer

Assuming that Henry admits the modification but it is not considered fraudulent,which of the following is true regarding Taylor's liability on the note?

Correct AnswerverifiedShow Answer

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Correct AnswerverifiedShow Answer

Who is the drawee of the check Doreen presented to Hot Dresses Inc.,?

Correct AnswerverifiedShow Answer

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account,but the principal does nothing until two months later after the agent leaves town with the funds?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the warranty or warranties applicable if an instrument is not an unaccepted draft presented to a drawee?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true regarding Henry's entitlement to payment from Millie?

Correct AnswerverifiedShow Answer

Under the UCC,how can proper presentment be made?

Correct AnswerverifiedShow Answer

When a party is tricked into signing a negotiable instrument without having a chance to determine that it is,in fact,a negotiable instrument,the party can claim _______.

Correct AnswerverifiedShow Answer

Which of the following was the result on appeal in the Case Opener in which the plaintiff optometrist sued the defending bank for cashing over 500 checks that his receptionist fraudulently embezzled through forging his signature?

Correct AnswerverifiedShow Answer

If a transfer is through endorsement,transfer warranties apply to any future holders; however,if the transfer does not occur through endorsement,the warranties apply only to the transferee.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Real defenses are as follows:
1.Infancy ...
View Answer

Correct Answer
verified
A bank to which presentment is made may ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

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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