QUESTION2

When the terms of a check are ambiguous, handwritten terms prevail over printed terms.

True

False

1 points

QUESTION 3

A contract for the payment of money which also serves as a substitute for money payable immediately is a:

		sovereign bond.
		corporate bond.
		commercial paper.
		commodity paper.

1 points

QUESTION 4

A holder in due course takes the instrument free of all:

		defenses and claims to the instrument.
		defenses and claims to the instrument except those which concern its validity.
		defenses and claims to the instrument except those which concern its negotiability.
		defenses and claims to the instrument except those it has notice of.

1 points

QUESTION 5

Ricardo borrowed $1,000 from his friend, John Wilfred. Ricardo signed a handwritten note stating, "I promise to pay $1,000 to John Wilfred on or before August 1, 2001." Under these circumstances:

		the note is negotiable because it was handwritten.
		the note is not negotiable because it does not acknowledge the reason for the debt.
		the note is not negotiable because it is not payable to order or to bearer.
		the note is negotiable because it is a simple contract.

1 points

QUESTION 6

Richard borrowed $100 from his friend, Leonard Smith. Richard signed a handwritten note stating, "I promise to pay $100 to the order of Leonard Smith." Under these circumstances:

		the note is negotiable because it is a simple contract.
		the note is not negotiable because it does not acknowledge the reason for the debt.
		the note is not negotiable because it does not state the time payment is due.
		the note is negotiable because it meets the requirements for negotiability.

1 points

QUESTION 7

A negotiable instrument:

		must be payable to a specific person.
		must be payable "to cash."
		must be payable "to order" or "to bearer."
		must be payable on fulfillment of a conditional promise.

1 points

QUESTION 8

A note which contains the statement, "I owe you $500":

		constitutes an order to pay.
		constitutes a promise to pay.
		is not a negotiable instrument.
		is a negotiable instrument.

1 points

QUESTION 9

A note in which the maker promises to pay to the order of James Brown $1,000 or a seven-string Martin guitar:

		is not negotiable because it contains a conditional promise.
		is negotiable for payment of the guitar only.
		is negotiable for payment only if James Brown is the holder of the instrument.
		is not negotiable because it is not payable for money alone.

1 points

QUESTION 10

The promise or order in an instrument must be to pay:

		a fixed amount of money.
		an undefined amount of money.
		an amount of money subject to a condition subsequent.
		the equivalent of the amount specified in any medium on demand.

1 points

QUESTION 11

Terry has a check indorsed "Pay to the order of Terry." Terry gives the check to Jane without indorsing it. Is Jane a holder?

		No, because Jane failed to indorse the check.
		No, because Terry failed to indorse the check.
		Yes, because only delivery was necessary to negotiate the check.
		Yes, because Jane may supply the missing indorsement herself.

1 points

QUESTION 12

If an instrument is made payable to cash, it is called bearer paper.

True

False

1 points

QUESTION 13

A bank does not owe a duty to its customer to pay any checks out of the account that are more than six months old.

True

False

1 points

QUESTION 14

Monica contracted with Joe's Furnishing's to complete the work on her house by 1st November. She gave Joe's a negotiable promissory note in the amount of $20,000, payable to the order of Joe's on November 1. Joe's then negotiated the note to the bank. He however, could not complete the work by 1st of November. If the bank is able to qualify as a holder in due course, which of the following statements is true?

		Monica is not liable to the bank because Joe's breached the contract, not her.
		The bank can collect the amount from Joe's because he negotiated the note to the bank.
		Monica can assert personal defense against the bank and avoid payment as Joe's did not complete the work on time.
		Monica cannot assert personal defense against the bank and avoid payment as it was a negotiation, and not a simple contract.

1 points

QUESTION 15

If a bank receives a properly drawn and payable check, there are sufficient funds to cover the check, and the bank wrongfully dishonors the check:

		the bank may be liable to the drawer only for the actual damages suffered by the drawer.
		the bank may be liable to the drawer only for the consequential damages suffered by the drawer.
		the bank is not liable for any damages to the drawer unless the bank dishonored the check intentionally, knowing it to be properly drawn and payable.
		the bank may be liable to the drawer for actual and consequential damages suffered by the drawer.

1 points

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