Source: Cengage text and cases business law 2

Read Chapter 27 and answer the following questions. Fully correct answers to questions 1-10 are worth 4 points each.

1. Dale signs a note "payable to the order of Somers Bank." Unless Dale has a valid defense against payment, her liability on this note is a. impaired. b. qualified. c. secondary. d. primary.

2. Roz writes a check drawn on his account at Northfield Bank and payable to the order of General Supply Co. The bank does not pay the check. Roz is a. absolved of liability on the check. b. liable to the bank for the amount of the check. c. liable to General Supply for the amount of the check d. entitled to payment of the amount of the check from General Supply.

3. Len makes a note payable to Melanie. Melanie indorses the back of the note and negotiates it to Nina Dress, Inc. Primarily liable on the note is

a. Len. b. Melanie. c. Nina Dress. d. none of the choices.

4. Frances writes a check "pay to the order of Gwyn" drawn on France's account at Absecon Bank. Gwyn presents the check for payment to Absecon Bank, which accepts it. Primarily liable on the check is

a. Frances. b. Absecon Bank. c. Gwyn. d. none of the choices.

5. Allen is the maker of a note, on which Benita is secondarily liable. Carlisle Catering Company is the current holder of the note. Benita will be obligated to pay the note if

a. Carlisle presents the note for payment. b. Carlisle breaches a transfer warranty. c. Carlisle negotiates the note to Delta Collection Agency, a third party. d. Allen defaults on the note.

6. Ollie signs a check "pay to the order of Poala drawn on Ollie's account in Egg Harbor Bank. To impose liability on Ollie if the bank dishonors the check, Poala should present it for payment within a. 10 days. b. 30 days. c. 180 days. d. 360 days.

7. Danielle agrees to cosign a promissory note for Englewood Equipment, Inc. to buy a computer. The note is payable to Frankford Bank. Danielle is an accommodation

a. maker. b. indorser. c. drawee. d. drawer.

8. Carla issues a note "payable to the order of Carla," forges Diego's signature as the maker, and indorses the note "pay to Elroy." Carla sells the note to Elroy, who negotiates it by indorsement and delivery to Frank. Frank can extend liability to

a. all of the parities no one. b. no one. c. Diego. d. Carla.

9. Jake pays Pat in good faith for a promissory note. Pat warrants that the draft has not been altered. This is a. a presentment warranty. b. a transfer warranty. c. a signature warranty. d. a breach of warranty.

10. Dan, a mentally impaired person, is asked by Elle, his long time friend, to sign a piece of paper that Elle says is an autograph book. In fact, the document is a note. If later sued on the note by an HDC a. Dan must pay the note. b. Dan's best defense would be mistake. c. Dan's best defense would be fraud in the inducement. d. Dan's best defense would be fraud in the execution.