Question 1

A negotiable instrument must be a conditional order to pay.

Accepted Answer

A) True 
 B)False

Question 2

A note is a promise,by the maker of the note,to pay a payee.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is a note of the bank where a payee purchases it and collects principle plus a set amount of interest in the future?

Accepted Answer

A)  Cashier's check
B)  Certificate of deposit
C)  Certified check
D)  Traveler's check
E)  DraftF) C) and E)
G) A) and B)

Question 4

With a[n] ________ instrument,payment can be made only at a specific time designated in the future.

Accepted Answer

A)  Immediate
B)  Nonrecourse
C)  Recourse
D)  Demand
E)  TimeF) A) and C)
G) B) and E)

Question 5

Which of the following is true regarding payment on a time instrument?

Accepted Answer

A)  It may be made payable at a past or future date so long as the method of computing interest is set forth either in the time instrument itself or in a separate document prepared in conjunction with the time instrument.
B)  It must be payable at a future time,and the date must be determinable through a separate instrument prepared in conjunction with the time instrument.
C)  It is payable in the same manner as a demand instrument.
D)  It must be payable at a specific future time which is easily determinable from the document itself.
E)  It may be made payable at a past or future date so long as a method for computing past-due interest is set forth in the document.F) A) and B)
G) B) and D)

Question 6

An instrument that merely mentions another document cannot be considered negotiable.

Accepted Answer

A) True 
 B)False

Question 7

All negotiable documents should be in electronic format.

Accepted Answer

A) True 
 B)False

Question 8

Disregarding the issue of whether Sophie properly performed,is the statement "I,Reza Salehi,promise to pay Sophie Smith or to bearer,the sum of $100 on Monday,July 22,2016," without a signature anywhere else on the document,sufficient to satisfy the signature requirement of negotiability?

Accepted Answer

A)  Yes,but only if Reza later signed another document confirming that he meant the handwritten statement to constitute his signature.
B)  No,because it was not signed at the bottom or anywhere else on the document.
C)  No,because it was not signed at the bottom.
D)  Yes,it is sufficient regardless of whether it is in handwriting or not because it contains an unconditional promise to pay.
E)  Yes,because it contains an unconditional promise to pay,and in the handwritten promise,the maker wrote his own name.F) A) and B)
G) A) and E)

Question 9

A person who comes into possession of a bearer instrument by theft cannot claim the payment due on it.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following instruments would classify as a negotiable instrument?

Accepted Answer

A)  A blank check.
B)  A check that states,"Pay to the order of John Green."
C)  A $100 bill.
D)  A check payable to "X."
E)  A check payable to "cash."F) C) and D)
G) C) and E)

Question 11

If an instrument fails to qualify as a negotiable instrument,it means the instrument fails to be an enforceable contract.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is true regarding the status of negotiable instruments in regard to international transactions?

Accepted Answer

A)  The Uniform Commercial Code is accepted as the defining word on negotiability in North America and Europe.
B)  The definitions in regard to negotiable contracts vary from country to country.
C)  The United Nations Committee on Contracts defines and enforces concepts of negotiability for all member nations.
D)  The World Trade Organization defines and enforces concepts of negotiability for all member nations.
E)  The Uniform Negotiation Act,agreed upon by a majority of countries,addresses definitions in regard to negotiability.F) All of the above
G) A) and B)

Question 14

When an instrument fails to meet the technical requirements necessary to qualify as a negotiable instrument,which of the following statements is true?

Accepted Answer

A)  The instrument is still enforced as a negotiable instrument if the holder can establish detrimental reliance based on a reasonable belief that the instrument qualified as a negotiable instrument.
B)  The instrument is still enforced as a negotiable instrument if it has been accepted by a bank.
C)  The instrument is still enforced as a negotiable instrument if it has been transferred to a holder in due course.
D)  The instrument is null and void and of no use to the holder.
E)  The instrument may qualify as an enforceable contract.F) B) and E)
G) B) and D)

Question 15

Which of the following is true regarding whether an agent's signature may satisfy the requirement of negotiability that the signature of a maker or drawer appear?

Accepted Answer

A)  An agent's signature on behalf of his or her principal cannot bind the principal and does not satisfy the signature requirement for negotiability.
B)  A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if the instrument is for an amount over $1,000.
C)  A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability.
D)  A duly authorized agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if the instrument is in an amount of $1,000 or less.
E)  An agent's signature on behalf of his or her principal binds the principal and satisfies the signature requirement for negotiability only if specific authorization from the principal allowing the agent to act on the specific transaction at issue is attached to the document.F) A) and B)
G) A) and E)

Question 16

In which of the following ways does an assignee from a simple contract differ from a holder of a negotiable instrument?

Accepted Answer

A)  A holder has greater rights than the transferor.
B)  An assignee has less rights than the transferor.
C)  An assignee and a holder's rights are equivalent.
D)  An assignee has greater rights than the transferor.
E)  A holder has less rights than the transferor.F) A) and C)
G) A) and E)

Question 17

Which of the following refers to the quality of a negotiable instrument that ensures it is mobile and available?

Accepted Answer

A)  Adaptable
B)  Versatile
C)  Movability
D)  Relative permanence
E)  MobilityF) None of the above
G) B) and E)

Question 18

Under the UCC which of the following statements is sufficient to make a promise or order to pay conditional?

Accepted Answer

A)  "I promise to pay from the corporate account."
B)  "I promise to pay if the following occurs."
C)  "I promise to pay as per the contract for the sale of goods between the parties."
D)  "I promise to pay because I owe the money."
E)  "Borrower may pay without penalty all or a portion of the amount owed earlier than it is due."F) B) and E)
G) B) and D)

Question 19

Which of the following is an example of a negotiable instrument?

Accepted Answer

A)  Checks,drafts,and promissory notes
B)  Checks but not drafts or promissory notes
C)  Drafts and checks,but not promissory notes
D)  Promissory notes and checks,but not drafts
E)  Promissory notes,but not drafts or checksF) B) and C)
G) C) and D)

Question 20

Which is the correct term for 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 promissory agreement
B)  A negotiable agreement
C)  A negotiable instrument
D)  A negated instrument
E)  A promised instrumentF) A) and B)
G) A) and C)

Exam 26: Negotiable Instruments: Negotiability and Transferability

A person who comes into possession of a bearer instrument by theft cannot claim the payment due on it.

Correct AnswerverifiedShow Answer

Which of the following is true regarding whether an agent's signature may satisfy the requirement of negotiability that the signature of a maker or drawer appear?

Correct AnswerverifiedShow Answer

Disregarding the issue of whether Sophie properly performed,is the statement "I,Reza Salehi,promise to pay Sophie Smith or to bearer,the sum of $100 on Monday,July 22,2016," without a signature anywhere else on the document,sufficient to satisfy the signature requirement of negotiability?

Correct AnswerverifiedShow Answer

Which of the following is true regarding the status of negotiable instruments in regard to international transactions?

Correct AnswerverifiedShow Answer

Which of the following is true regarding payment on a time instrument?

Correct AnswerverifiedShow Answer

Under the UCC which of the following statements is sufficient to make a promise or order to pay conditional?

Correct AnswerverifiedShow Answer

A negotiable instrument must be a conditional order to pay.

Correct AnswerverifiedShow Answer

All negotiable documents should be in electronic format.

Correct AnswerverifiedShow Answer

In which of the following ways does an assignee from a simple contract differ from a holder of a negotiable instrument?

Correct AnswerverifiedShow Answer

Which is the correct term for 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

Which of the following refers to the quality of a negotiable instrument that ensures it is mobile and available?

Correct AnswerverifiedShow Answer

If an instrument fails to qualify as a negotiable instrument,it means the instrument fails to be an enforceable contract.

Correct AnswerverifiedShow Answer

Which of the following is a note of the bank where a payee purchases it and collects principle plus a set amount of interest in the future?

Correct AnswerverifiedShow Answer

Which of the following instruments would classify as a negotiable instrument?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An instrument that merely mentions another document cannot be considered negotiable.

Correct AnswerverifiedShow Answer

Which of the following is an example of a negotiable instrument?

Correct AnswerverifiedShow Answer

When an instrument fails to meet the technical requirements necessary to qualify as a negotiable instrument,which of the following statements is true?

Correct AnswerverifiedShow Answer

A note is a promise,by the maker of the note,to pay a payee.

Correct AnswerverifiedShow Answer

With a[n] ________ instrument,payment can be made only at a specific time designated in the future.

Correct AnswerverifiedShow Answer

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