Question 1

Which of the following statements is true about the Negotiable Instruments Law in China?

Accepted Answer

A)  China's law requires discrepancies between the Chinese characters and the numbers to be resolved in favor of the Chinese characters.
B)  China's law addresses only banks,not individuals,as endorsers.
C)  China's law permits monetary amounts to be written in either Chinese characters or numbers.
D)  The purpose of China's law is to promote free trade.
E)  China's law specifically addresses the use of promissory notes by individuals.F) A) and B)
G) C) and E)

Question 2

Which of the following is true regarding Zoe's liability to Rohan?

Accepted Answer

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

Question 3

Which of the following is a party who has authority to act on behalf of and bind another party?

Accepted Answer

A)  A principal
B)  A real endorser
C)  An agent
D)  A transferor
E)  A warrantorF) A) and B)
G) A) and E)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Real defenses apply to ________,whereas personal defenses do not apply to ________.

Accepted Answer

A)  Holders;holders.
B)  Holders;holders in due course.
C)  All parties;holders in due course.
D)  All parties;endorsers.
E)  All parties;holders.F) None of the above
G) A) and D)

Question 6

To hold an endorser secondarily liable on a check,a holder must present a check within how many days of the endorsement?

Accepted Answer

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

Question 7

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

Accepted Answer

A)  Recklessness
B)  Fraud in the factum
C)  Malice
D)  Strict liability
E)  NegligenceF) A) and B)
G) A) and C)

Question 8

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 9

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)  Each endorser is liable for the full amount to the subsequent endorser,but only the last endorser is liable to any holder.
C)  Each endorser is liable to the holder in proportion to the number of endorsers that exist.
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)  Only the last endorser is liable to the holder and no prior endorsers are liable to a subsequent endorser.F) A) and C)
G) A) and D)

Question 10

After notice of dishonor is received,how long do parties other than a collecting bank have in order to give notice of dishonor to a secondarily liable party?

Accepted Answer

A)  It must be given within 7 days.
B)  It must be given within 10 days.
C)  It must be given before midnight of the next day.
D)  It must be given within 48 hours.
E)  It must be given within 30 days.F) C) and D)
G) A) and E)

Question 11

Which of the following statements is true regarding detecting fraudulent payment in online transaction systems?

Accepted Answer

A)  Online business cannot require more extensive authentication procedures when a customer makes a payment.
B)  There are no options for online businesses to properly authenticate the customer making a payment.
C)  Businesses have several options for ensuring their online transaction system can detect fraudulent payment.
D)  Businesses have no options to prevent fraud.
E)  Insurance that covers fraudulent payments in online transaction systems is not available.F) C) and D)
G) A) and E)

Question 12

What is the name of the party that orders the drawee to pay?

Accepted Answer

A)  Acceptor
B)  Promisor
C)  Drawer
D)  Endorser
E)  MakerF) B) and D)
G) C) and D)

Question 13

If,instead of demanding payment on the note,Tonya returns the note to Felicia without marking it in any way,is Felicia still liable on the note?

Accepted Answer

A)  No,because the note became void once it was reacquired by Felicia.
B)  No,since Tonya surrendered the note to Felicia,Felicia is no longer liable on the note.
C)  Yes,because Felicia must mutilate the note to show that Felicia is discharged from liability.
D)  Yes,she is primarily liable on the note,but the other endorsers were discharged.
E)  Yes,because she has not been discharged.F) A) and D)
G) All of the above

Question 14

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

Accepted Answer

A)  It is unlikely that Chloe 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.
B)  It is unlikely that Chloe 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.
C)  It is unlikely that Chloe 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.
D)  It is likely that Chloe will have to pay the check as a secondarily liable party.
E)  It is unlikely that Chloe 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.F) B) and D)
G) C) and D)

Question 15

What is the name of the party that promises to pay a set sum to the holder of a promissory note or certificate of deposit?

Accepted Answer

A)  Maker
B)  Endorser
C)  Promisor
D)  Drawer
E)  AcceptorF) B) and D)
G) C) and E)

Question 16

When the transfer of an instrument breaches a warranty associated with the instrument,which type of liability arises on the instrument?

Accepted Answer

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

Question 17

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 has no knowledge that the drawer's signature or the draft is unauthorized.
B)  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.
C)  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.
D)  Only one warranty applies,that the instrument has not been altered.
E)  Only one warranty applies,that the warrantor of the instrument is or was entitled to payment or authorized to obtain payment.F) D) and E)
G) C) and E)

Question 18

Violet has authority to act on behalf of and bind Ryan.Which of the following legal term describes Ryan's position?

Accepted Answer

A)  Real endorser
B)  Warrantor
C)  Transferor
D)  Agent
E)  PrincipalF) B) and C)
G) C) and D)

Question 19

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

Question 20

An agent's signature can create liability for a principal as long as the agent is authorized to sign a negotiable instrument on behalf of the principal.

Accepted Answer

A) True 
 B)False

Exam 28: Liability, defenses, and Discharge

An agent's signature can create liability for a principal as long as the agent is authorized to sign a negotiable instrument on behalf of the principal.

Correct AnswerverifiedShow Answer

Which of the following statements is true about the Negotiable Instruments Law in China?

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,what can the party claim?

Correct AnswerverifiedShow Answer

To hold an endorser secondarily liable on a check,a holder must present a check within how many days of the endorsement?

Correct AnswerverifiedShow Answer

Which of the following statements is true regarding detecting fraudulent payment in online transaction systems?

Correct AnswerverifiedShow Answer

What is the name of the party that orders the drawee to pay?

Correct AnswerverifiedShow Answer

Which of the following is a party who has authority to act on behalf of and bind another party?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the transfer of an instrument breaches a warranty associated with the instrument,which type of liability arises on the instrument?

Correct AnswerverifiedShow Answer

If,instead of demanding payment on the note,Tonya returns the note to Felicia without marking it in any way,is Felicia still liable on the note?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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 is true regarding Zoe's liability to Rohan?

Correct AnswerverifiedShow Answer

Violet has authority to act on behalf of and bind Ryan.Which of the following legal term describes Ryan's position?

Correct AnswerverifiedShow Answer

After notice of dishonor is received,how long do parties other than a collecting bank have in order to give notice of dishonor to a secondarily liable party?

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

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

Correct AnswerverifiedShow Answer

Real defenses apply to ________,whereas personal defenses do not apply to ________.

Correct AnswerverifiedShow Answer

What is the name of the party that promises to pay a set sum to the holder of a promissory note or certificate of deposit?

Correct AnswerverifiedShow Answer

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The authorized agent cannot be liable if...
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Real defenses apply to ,whereas personal defenses do not apply to .

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