Question 1

Negotiable instruments payable to whoever is bearing them are known as ______ instruments.

Accepted Answer

A)   Demand
B)   Order
C)   Transactional
D)   Bearer
E)   PayorF) A) and B)
G) A) and C)

Question 2

A ______ is a specific draft, drawn by the owner of a checking account, ordering the bank to pay the payee from that drawer's account.

Accepted Answer

A)   Promissory contract
B)   Certificates of deposit
C)   Note
D)   Check
E)   Time instrumentF) B) and D)
G) B) and E)

Question 3

A negotiable instrument must be a conditional order to pay.

Accepted Answer

A) True 
 B)False

Question 4

Set forth the two exceptions to the time-certain requirement for negotiability discussed in the text.

Accepted Answer

First, an instrument that permits accele...

Question 5

An automated signature satisfies the UCC requirement that the signature of the creator appear in order for an instrument to be negotiable.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true regarding an IOU instrument containing the language "payable on demand"?

Accepted Answer

A)   The instrument is not negotiable because it does not contain an unconditional promise or order to pay, but it may be an enforceable contract.
B)   The instrument contains an unconditional promise to pay; and, therefore, the fact that it is an IOU instrument does not affect negotiability.
C)   The instrument contains an unconditional promise to pay but nevertheless is not negotiable because it is an IOU instrument.
D)   The instrument is not negotiable because the words "payable on demand" are included; otherwise, the IOU instrument would contain an unconditional promise to pay.
E)   The instrument is not negotiable, nor could it be an enforceable contract, because it does not contain an unconditional promise to pay.F) A) and B)
G) B) and E)

Question 7

A currency or cash substitution is a relatively new development in the law arising in the 20th century.

Accepted Answer

A) True 
 B)False

Question 8

Documents used as payments to facilitate commercial transactions were labeled as ______ under article 3 of the UCC.

Accepted Answer

A)   Commerce paper
B)   Commercial paper
C)   Commerce notes
D)   Negotiable instruments
E)   Payment notesF) B) and D)
G) B) and E)

Question 9

Which of the following is true regarding negotiation of an instrument?

Accepted Answer

A)   Negotiation of both an order instrument and bearer instrument is by delivery alone.
B)   Negotiation of both an order instrument and bearer instrument require endorsement plus delivery.
C)   Negotiation of an order instrument is by endorsement plus delivery, while negotiation of a bearer instrument is by delivery alone.
D)   Negotiation of a bearer instrument is by endorsement plus delivery, while negotiation of an order instrument is by delivery alone.
E)   Negotiation of both an order instrument and a bearer instrument requires both delivery and an additional three days to allow for bank clearance.F) C) and E)
G) None of the above

Question 10

"Yard Mowing." Paula agreed to mow John's yard once a week for $50 per week throughout the summer. Paula, however, was having trouble getting her money from John. On one occasion, he in handwriting gave her in IOU saying "I, John Jones, owe Paula Smith $50." A couple of weeks later, John did not have the money to pay Paula what he owed her, and he handwrote the following on a piece of paper and gave it to her: "I, John Jones, promise to pay Paula Smith or to bearer, the sum of $100 on Monday, July 22, 2013." Paula quit mowing John's yard; and, disgusted with John, Paula assigned both documents to Vince. When Vince presented the documents to John, John refused to pay on the basis that after inspecting the yard, he decided that Paula was doing a poor job. Vince told him the documents constituted negotiable instruments, but John pointed out that he had not signed the documents with his signature at the end.
-What is the effect of the instruments being written by hand?

Accepted Answer

A)   Handwriting does not prevent the instruments from being considered negotiable only because neither Paula nor John would be considered merchants in the transactions at issue.
B)   Handwriting does not prevent the instruments from being considered negotiable only because John would not be considered a merchant in the transaction at issue, and Paula's status as a merchant is irrelevant.
C)   Handwriting does not prevent the instrument from being considered negotiable only because Paula would not be considered a merchant in the transaction at issue, and John's status as a merchant is irrelevant.
D)   Handwriting does not prevent the IOU instrument from being negotiable, but it does prevent the other instrument from being negotiable.
E)   The issue of the instruments being handwritten does not prevent either from being considered negotiable.F) A) and C)
G) None of the above

Question 11

What is the difference between a demand instrument and a time instrument?

Accepted Answer

With a demand instrument, the ...

Question 12

The ancient ____, or law of merchants, of ______ recognized that agreements could be paid for with documents that promised payment and that these documents themselves could then be circulated as a substitute for money.

Accepted Answer

A)   Lex mercatoria; England
B)   Lax trade; England
C)   Lex merchantia; France
D)   Lax merchant; Italy
E)   Lexi merchant; FranceF) A) and E)
G) C) and D)

Question 13

Which of the following was the result in Samuel James Thompson v. First Citizens Bank & Trust Co., the case in the text in which the parties disagreed as to whether an instrument referenced as a certificate of deposit was actually negotiable?

Accepted Answer

A)   The court ruled that the instrument was negotiable.
B)   The court ruled that the instrument was not negotiable because it clearly stated that it was non-transferable.
C)   The court ruled that the instrument was not negotiable because it lacked the signatures of both parties.
D)   The court ruled that the instrument was not negotiable because it lacked the signature of a bank representative.
E)   The court ruled that the instrument was not negotiable because it contained a condition precedent and was not an unconditional order to pay.F) B) and C)
G) A) and E)

Question 14

Which of the following was the result in State v. Warner, the case in the text involving whether an electronic transfer qualified as a "draft" or "other written statement" for purposes of establishing a violation of state law?

Accepted Answer

A)   That an electronic transfer qualified as a draft or other written statement for purposes of establishing a violation of the state law at issue.
B)   That an electronic transfer did not qualify as a draft or other written statement for purposes of establishing a violation of the state law at issue.
C)   That an electronic transfer qualified as a draft or other written statement for purposes of establishing a violation of the state law at issue only if it could be established that a bank official described the transaction as a "draft."
D)   That an electronic transfer qualified as a draft or other written statement for purposes of establishing a violation of the state law at issue only if it could be established that a bank official described the transaction as a "negotiable."
E)   That the issue of whether the instrument was a draft or other written statement was irrelevant because the state law at issue was unconstitutional.F) C) and E)
G) D) and E)

Question 15

"Book Payment." Molly and Pat signed a contract providing that "Pat will furnish the correct used business law book for use in Molly's business law class; and on August 15, 2013, Molly promises to pay Pat $50 for the book." Molly took the book and planned to pay Pat. Meanwhile, Pat properly assigned the contract Molly had signed to Jack. When Molly went to class, however, she discovered that the book was the incorrect book. When Jack asked Molly for payment, Molly refused. Molly told Jack that the book was useless to her and that she was not paying either him or Pat anything for it. Jack told Molly that he had an enforceable assignment in the form of a negotiable instrument and that he could collect regardless of whether the book was useless. Molly did not believe him. Since she was trying to save money on books, she also agreed to buy Tim's U.S. history book for $40. She had an oral agreement with Tim that he would give her the book and that she would pay him in three days. This time Molly got the right book. Tim, in writing, properly assigned the right to the $40 payment to Richard. Richard asked Molly for the money. Molly admitted her agreement with Tim but told Richard that she was not going to pay him because he did not have a negotiable instrument. Molly also purchased a communications book from Sam promising in writing to give him, to his order, a DVD she had in return the next day.
-What is the effect of Molly agreeing to give Sam a DVD in return for the book?

Accepted Answer

A)   Molly and Sam have an enforceable contract, and Molly has also satisfied the negotiability condition regarding the form of payment.
B)   Molly and Sam have an enforceable contract, but the agreement fails to satisfy the negotiability requirement that payment be in a sum certain in money.
C)   Because payment is not in a sum certain for money, Molly and Sam do not have an enforceable contract nor does the agreement satisfy the negotiability requirement that payment be in a sum certain in money.
D)   Because payment is not in a sum certain for money, Molly and Sam do not have an enforceable contract, but the requirement of negotiability regarding the form of payment has been satisfied.
E)   Unless Sam acknowledges in writing that the fair market value of the DVD is equivalent to the value of the book he provided to Molly, there is no enforceable contract nor is the agreement negotiable.F) C) and E)
G) A) and B)

Question 16

Which of the following is a written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain in money at either a time certain or on demand?

Accepted Answer

A)   A negated instrument
B)   A promised instrument
C)   A negotiable instrument
D)   A promissory agreement
E)   A negotiable agreementF) B) and C)
G) B) and D)

Question 17

Which of the following is true regarding the relationship between negotiability and an unconditional promise or order to pay?

Accepted Answer

A)   There is no such requirement in order to find negotiability.
B)   A promise or order to pay must be specific and not be implied in order for negotiability to be found.
C)   Simply acknowledging a debt satisfies the negotiability requirement of an unconditional promise to pay.
D)   A common IOU is sufficient to satisfy the negotiability requirement of an unconditional promise to pay.
E)   An offer of unconditional partial payment satisfies requirements of negotiability.F) D) and E)
G) C) and E)

Question 18

In order to satisfy the requirement of negotiability that payment be at a time certain or on demand, acceleration of payment is not allowable.

Accepted Answer

A) True 
 B)False

Question 19

Set forth the seven requirements for an instrument to be negotiable.

Accepted Answer

The seven requirements for an instrument...

Question 20

"Yard Mowing." Paula agreed to mow John's yard once a week for $50 per week throughout the summer. Paula, however, was having trouble getting her money from John. On one occasion, he in handwriting gave her in IOU saying "I, John Jones, owe Paula Smith $50." A couple of weeks later, John did not have the money to pay Paula what he owed her, and he handwrote the following on a piece of paper and gave it to her: "I, John Jones, promise to pay Paula Smith or to bearer, the sum of $100 on Monday, July 22, 2013." Paula quit mowing John's yard; and, disgusted with John, Paula assigned both documents to Vince. When Vince presented the documents to John, John refused to pay on the basis that after inspecting the yard, he decided that Paula was doing a poor job. Vince told him the documents constituted negotiable instruments, but John pointed out that he had not signed the documents with his signature at the end.
-Which of the following is true regarding the effect on negotiability of John's determination that Paula did a poor job mowing the yard?

Accepted Answer

A)   Paula's performance prevents the instruments from being negotiable only if John meets the burden of proof of establishing to the judge by a preponderance of the evidence that Paula did a poor job mowing the yard.
B)   Paula's performance prevents the instruments from being negotiable only if Paula meets the burden of proof of establishing to the judge by a preponderance of the evidence that she did an acceptable job mowing the yard.
C)   Paula's performance prevents the instruments from being negotiable only if John meets the burden of proof of establishing to the judge by a preponderance of the evidence that Paula did a poor job mowing the yard, and if Paula signed and provided to John a document agreeing that the instrument would lack negotiability unless she properly performed.
D)   Paula's performance prevents the instruments from being negotiable only if Paula meets the burden of proof of establishing to the judge by a preponderance of the evidence that she did an acceptable job mowing the yard and that she did not sign any document agreeing that the instrument would lack negotiability upon John's objection.
E)   Manner of performance is not one of the listed elements for a finding of negotiability.F) A) and E)
G) All of the above

Exam 26: Negotiable Instruments: Negotiability and Transferability

Negotiable instruments payable to whoever is bearing them are known as ______ instruments.

Correct Answer
verified

Set forth the two exceptions to the time-certain requirement for negotiability discussed in the text.

Correct Answer
verified
First, an instrument that permits accele...
View Answer

Which of the following is true regarding the relationship between negotiability and an unconditional promise or order to pay?

Correct Answer
verified

A ______ is a specific draft, drawn by the owner of a checking account, ordering the bank to pay the payee from that drawer's account.

Correct Answer
verified

In order to satisfy the requirement of negotiability that payment be at a time certain or on demand, acceleration of payment is not allowable.

Correct Answer
verified

A currency or cash substitution is a relatively new development in the law arising in the 20^th century.

Correct Answer
verified

Which of the following was the result in Samuel James Thompson v. First Citizens Bank & Trust Co., the case in the text in which the parties disagreed as to whether an instrument referenced as a certificate of deposit was actually negotiable?

Correct Answer
verified

An automated signature satisfies the UCC requirement that the signature of the creator appear in order for an instrument to be negotiable.

Correct Answer
verified

What is the difference between a demand instrument and a time instrument?

Correct Answer
verified
With a demand instrument, the ...
View Answer

Which of the following was the result in State v. Warner, the case in the text involving whether an electronic transfer qualified as a "draft" or "other written statement" for purposes of establishing a violation of state law?

Correct Answer
verified

The ancient , or law of merchants, of __ recognized that agreements could be paid for with documents that promised payment and that these documents themselves could then be circulated as a substitute for money.

Correct Answer
verified

Set forth the seven requirements for an instrument to be negotiable.

Correct Answer
verified
The seven requirements for an instrument...
View Answer

Which of the following is true regarding negotiation of an instrument?

Correct Answer
verified

Which of the following is a written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain in money at either a time certain or on demand?

Correct Answer
verified

A negotiable instrument must be a conditional order to pay.

Correct Answer
verified

Documents used as payments to facilitate commercial transactions were labeled as ______ under article 3 of the UCC.

Correct Answer
verified

Correct Answer
verified

Which of the following is true regarding an IOU instrument containing the language "payable on demand"?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Exam 26: Negotiable Instruments: Negotiability and Transferability

Negotiable instruments payable to whoever is bearing them are known as ______ instruments.

Correct AnswerverifiedShow Answer

Set forth the two exceptions to the time-certain requirement for negotiability discussed in the text.

Correct AnswerverifiedFirst, an instrument that permits accele...View AnswerShow Answer

Which of the following is true regarding the relationship between negotiability and an unconditional promise or order to pay?

Correct AnswerverifiedShow Answer

A ______ is a specific draft, drawn by the owner of a checking account, ordering the bank to pay the payee from that drawer's account.

Correct AnswerverifiedShow Answer

In order to satisfy the requirement of negotiability that payment be at a time certain or on demand, acceleration of payment is not allowable.

Correct AnswerverifiedShow Answer

A currency or cash substitution is a relatively new development in the law arising in the 20th century.

Correct AnswerverifiedShow Answer

Which of the following was the result in Samuel James Thompson v. First Citizens Bank & Trust Co., the case in the text in which the parties disagreed as to whether an instrument referenced as a certificate of deposit was actually negotiable?

Correct AnswerverifiedShow Answer

An automated signature satisfies the UCC requirement that the signature of the creator appear in order for an instrument to be negotiable.

Correct AnswerverifiedShow Answer

What is the difference between a demand instrument and a time instrument?

Correct AnswerverifiedWith a demand instrument, the ...View AnswerShow Answer

Which of the following was the result in State v. Warner, the case in the text involving whether an electronic transfer qualified as a "draft" or "other written statement" for purposes of establishing a violation of state law?

Correct AnswerverifiedShow Answer

The ancient ____, or law of merchants, of ______ recognized that agreements could be paid for with documents that promised payment and that these documents themselves could then be circulated as a substitute for money.

Correct AnswerverifiedShow Answer

Set forth the seven requirements for an instrument to be negotiable.

Correct AnswerverifiedThe seven requirements for an instrument...View AnswerShow Answer

Which of the following is true regarding negotiation of an instrument?

Correct AnswerverifiedShow Answer

Which of the following is a written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain in money at either a time certain or on demand?

Correct AnswerverifiedShow Answer

A negotiable instrument must be a conditional order to pay.

Correct AnswerverifiedShow Answer

Documents used as payments to facilitate commercial transactions were labeled as ______ under article 3 of the UCC.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is true regarding an IOU instrument containing the language "payable on demand"?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
First, an instrument that permits accele...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A currency or cash substitution is a relatively new development in the law arising in the 20^th century.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
With a demand instrument, the ...
View Answer

Correct Answer
verified

The ancient , or law of merchants, of __ recognized that agreements could be paid for with documents that promised payment and that these documents themselves could then be circulated as a substitute for money.

Correct Answer
verified

Correct Answer
verified
The seven requirements for an instrument...
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