Question 1

Which of the following does not prevent a holder from being a holder in due course?

Accepted Answer

A)  Notice that the instrument has been dishonored.
B)  Notice that the instrument was issued as part of a series that is in default.
C)  Notice that the instrument has been altered or contains an unauthorized signature.
D)  Notice that an employee other than the treasurer of a company signed an instrument.
E)  Notice that the instrument is overdue.F) A) and E)
G) C) and D)

Question 2

The transferability of an instrument may be limited by a restrictive endorsement.

Accepted Answer

A) True 
 B)False

Question 3

An) ________ endorsement is the endorser's signature along with a named endorsee.

Accepted Answer

A)  Specific
B)  Special
C)  Qualified
D)  Blank
E)  AllongeF) A) and B)
G) A) and C)

Question 4

Once an instrument is negotiable,it remains negotiable.

Accepted Answer

A) True 
 B)False

Question 5

What is the effect of the designation,"Hiro Murakami,without recourse?"

Accepted Answer

A)  It has no effect on anyone,including,but not limited to,any subsequent holder.
B)  It has no effect on any subsequent holder.
C)  It means that Hiro Murakami does not provide any guarantees to subsequent holders if the instrument is later dishonored.
D)  It means that Hiro Murakami is providing that neither he nor the person who transferred the instrument to him can be held further liable to any subsequent holder.
E)  It means that Hiro Murakami is providing that any subsequent holder cannot be held liable.F) C) and D)
G) A) and E)

Question 6

A transaction involving a promissory note is a legitimate documentary transaction in Russia.

Accepted Answer

A) True 
 B)False

Question 7

Under rules created by the FTC in the 1970s:

Accepted Answer

A)  Finance companies may avoid a debtor's claims and defenses if they can prove they and the transferor company were not closely connected and they had no knowledge of the seller's promises.
B)  Finance companies that have purchased negotiable installment notes from a seller are subject to the same claims and defenses that a debtor could assert against the seller,and do not have the rights of an HDC.
C)  A subsequent holder who knows a check was dishonored when he purchased it may not receive payment under the Shelter Principle.
D)  A subsequent holder may not receive payment on a check that was dishonored even if he was not aware it was dishonored when he purchased it.
E)  Finance companies that have purchased negotiable installment notes from a seller are not subject to the claims and defenses that a debtor could assert against the seller,and therefore have all the rights of an HDC.F) D) and E)
G) A) and B)

Question 8

Which kind of endorsement places a condition on payment?

Accepted Answer

A)  Trust endorsement.
B)  Conditional endorsement.
C)  Endorsement to prohibit further endorsement.
D)  Conditional bearer endorsement.
E)  Bearer endorsement.F) A) and D)
G) B) and C)

Question 9

Was the check properly delivered to Brad?

Accepted Answer

A)  Yes,because both Brad and the bank are considered holders in due course.
B)  Yes,because it was bearer paper,delivery occurred whenever possession was taken.
C)  No,because he was not intended to receive it.
D)  Yes,because it was order paper,delivery occurred whenever possession was taken.
E)  Yes,but only because it was thereafter presented to the bank and cashed.F) B) and D)
G) A) and E)

Question 10

Negotiability can be destroyed by a conditional endorsement.

Accepted Answer

A) True 
 B)False

Question 11

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

Accepted Answer

A)  Trust endorsement.
B)  Endorsement to prohibit further endorsement.
C)  Conditional bearer endorsement.
D)  Conditional endorsement.
E)  Bearer endorsement.F) A) and C)
G) D) and E)

Question 12

Which of the following words are necessary for an endorsement to be considered qualified?

Accepted Answer

A)  Addition of the words,"trust endorsement."
B)  Addition of the words,"restricted endorsement."
C)  Addition of the words,"special endorsement."
D)  Addition of the words,"without recourse."
E)  Addition of the words,"conditional entrustment."F) B) and E)
G) C) and E)

Question 13

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?

Accepted Answer

A)  Special qualified.
B)  Blank qualified.
C)  Trust.
D)  Conditional.
E)  Restrictive.F) A) and C)
G) D) and E)

Question 14

Set forth the requirements a party must meet in order to be considered a holder in due course.

Accepted Answer

In order to be consi...

Question 15

Shira purchased a refrigerator from ABC Appliance store for $800.She takes the refrigerator home and discovers that it is defective.She calls ABC Appliance store and tells them that she would like to return the refrigerator.ABC Appliance store tells her that they have assigned the promissory note she provided the store in order to purchase the refrigerator to a finance company and that the finance company,as a holder in due course,is not subject to defenses.Which of the following is true regarding the rights of parties?

Accepted Answer

A)  The finance company is subject to the defenses of Shira because of the Federal Trade Commission rule created to protect consumers.
B)  Shira can assert her defenses against the finance company only if she can prove that the finance company had knowledge that ABC Appliance store sold defective equipment from time to time.
C)  ABC Appliance store is correct in that Shira cannot assert her defenses against the finance company.
D)  Shira can assert her defenses against the finance company only if she agrees to arbitrate the dispute.
E)  Shira can assert her defenses against the finance company only because she gave notice of the problem within 5 days of the sale.F) D) and E)
G) A) and E)

Question 16

List the five conditions under which a holder may take an instrument for value.

Accepted Answer

A holder may take an instrument for valu...

Question 17

At any date after the expressed due date on a time instrument,the instrument becomes overdue.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an instrument payable to cash or whoever is in possession of the instrument?

Accepted Answer

A)  An order instrument.
B)  A delivery instrument.
C)  A transfer instrument.
D)  A bearer instrument.
E)  An acknowledgement instrument.F) B) and C)
G) None of the above

Question 19

An endorsement that is followed by a statement that restricts payment,and can be used as a defense for the endorser against the endorsee,is which of the following?

Accepted Answer

A)  Special unqualified endorsement.
B)  Special qualified endorsement.
C)  Trust endorsement.
D)  Endorsement that prohibits further endorsement.
E)  Conditional endorsement.F) B) and E)
G) B) and D)

Question 20

Kostas is sending his brother-in-law and agent,Ben,who he does not particularly trust,to deposit a check belonging to Kostas into Kostas's business bank account.What is the best way for Kostas to endorse the check to attempt to limit any misappropriation?

Accepted Answer

Kostas should sign the back of...

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

Correct Answer
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Which of the following is an instrument payable to cash or whoever is in possession of the instrument?

Correct Answer
verified

Which of the following does not prevent a holder from being a holder in due course?

Correct Answer
verified

An endorsement that is followed by a statement that restricts payment,and can be used as a defense for the endorser against the endorsee,is which of the following?

Correct Answer
verified

Which of the following words are necessary for an endorsement to be considered qualified?

Correct Answer
verified

Was the check properly delivered to Brad?

Correct Answer
verified

The transferability of an instrument may be limited by a restrictive endorsement.

Correct Answer
verified

Set forth the requirements a party must meet in order to be considered a holder in due course.

Correct Answer
verified
In order to be consi...
View Answer

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

Correct Answer
verified

List the five conditions under which a holder may take an instrument for value.

Correct Answer
verified
A holder may take an instrument for valu...
View Answer

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?

Correct Answer
verified

Negotiability can be destroyed by a conditional endorsement.

Correct Answer
verified

Once an instrument is negotiable,it remains negotiable.

Correct Answer
verified

An) ________ endorsement is the endorser's signature along with a named endorsee.

Correct Answer
verified

What is the effect of the designation,"Hiro Murakami,without recourse?"

Correct Answer
verified

At any date after the expressed due date on a time instrument,the instrument becomes overdue.

Correct Answer
verified

A transaction involving a promissory note is a legitimate documentary transaction in Russia.

Correct Answer
verified

Under rules created by the FTC in the 1970s:

Correct Answer
verified

Kostas is sending his brother-in-law and agent,Ben,who he does not particularly trust,to deposit a check belonging to Kostas into Kostas's business bank account.What is the best way for Kostas to endorse the check to attempt to limit any misappropriation?

Correct Answer
verified
Kostas should sign the back of...
View Answer

Which kind of endorsement places a condition on payment?

Correct Answer
verified

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

Correct AnswerverifiedShow Answer

Which of the following is an instrument payable to cash or whoever is in possession of the instrument?

Correct AnswerverifiedShow Answer

Which of the following does not prevent a holder from being a holder in due course?

Correct AnswerverifiedShow Answer

An endorsement that is followed by a statement that restricts payment,and can be used as a defense for the endorser against the endorsee,is which of the following?

Correct AnswerverifiedShow Answer

Which of the following words are necessary for an endorsement to be considered qualified?

Correct AnswerverifiedShow Answer

Was the check properly delivered to Brad?

Correct AnswerverifiedShow Answer

The transferability of an instrument may be limited by a restrictive endorsement.

Correct AnswerverifiedShow Answer

Set forth the requirements a party must meet in order to be considered a holder in due course.

Correct AnswerverifiedIn order to be consi...View AnswerShow Answer

The statement,"Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

Correct AnswerverifiedShow Answer

List the five conditions under which a holder may take an instrument for value.

Correct AnswerverifiedA holder may take an instrument for valu...View AnswerShow Answer

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?

Correct AnswerverifiedShow Answer

Negotiability can be destroyed by a conditional endorsement.

Correct AnswerverifiedShow Answer

Once an instrument is negotiable,it remains negotiable.

Correct AnswerverifiedShow Answer

An) ________ endorsement is the endorser's signature along with a named endorsee.

Correct AnswerverifiedShow Answer

What is the effect of the designation,"Hiro Murakami,without recourse?"

Correct AnswerverifiedShow Answer

At any date after the expressed due date on a time instrument,the instrument becomes overdue.

Correct AnswerverifiedShow Answer

A transaction involving a promissory note is a legitimate documentary transaction in Russia.

Correct AnswerverifiedShow Answer

Under rules created by the FTC in the 1970s:

Correct AnswerverifiedShow Answer

Kostas is sending his brother-in-law and agent,Ben,who he does not particularly trust,to deposit a check belonging to Kostas into Kostas's business bank account.What is the best way for Kostas to endorse the check to attempt to limit any misappropriation?

Correct AnswerverifiedKostas should sign the back of...View AnswerShow Answer

Which kind of endorsement places a condition on payment?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In order to be consi...
View Answer

Correct Answer
verified

Correct Answer
verified
A holder may take an instrument for valu...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Kostas should sign the back of...
View Answer

Correct Answer
verified