Law332 Anderson final, best
Eve owes Fred $200,000. A court awards Fred a judgment in this amount. To satisfy the judgment, Eve's home is sold at public auction for $150,000. The state homestead exemption is $50,000. Fred gets...
$100,000
Aaron is the maker of a promissory note payable to Best Financial Corporation. Best is the drawer of the check payable to Commercial Properties, inc. Commercial indorses the check with a blank indorsement. Who is primarily liable in these situations?
Aaron on the note
Bob signs a check payable to the order of City Bank, filling in the blanks for the amount with the figures $100 and One thousand and 00/100 dollars, this check is payable in the amount of
$1000
National Corporation has not paid any of its 15 creditors, 6 of whom have unsecured claims of more than $8,000. The creditors can for National into bankruptcy under...
Chapter 7 or Chapter 11.
A person who acquires a check with notice that the drawee bank previously dishonored it cannot become an HDC
True
A person who transfers an instrument for payment warrant to any other person who in good faith accepts or pays the instrument (with exceptions) that the instrument has not been altered.
True
Presentment warranties protect the person to whom an instrument is presented for payment
True
The notion without recourse may be used by an indorser to avoid secondary liability for payment on the instrument
True
an instrument that promises to pay in good can be negotiable
false
Jose receives a check from Interstate Transport Corporation and indorses it "without recourse." This is:
A qualified indorsement
Jill pays Kay $100 in the form of personal check. Kay negotiates the check to Larry by signing her name on the instrument, she is:
An indorser
Carol is the sole proprietor of Diners Cafe, which owes debts in an amount more than Carol believes she and the cafe can repay. The creditors agree that liquidating the business would not be in their best interests. To stay in business, Lora could file for bankruptcy under...
Chapter 11 or Chapter 13.
Drugs monthly income is $3,500, his monthly expenses are $3,000, and his debts are nearly $25,000. If he applied the difference between his income and expenses to pay off the debts, they could be eliminated within 5 years. The provision in the Bankruptcy Code that covers this plan is...
Chapter 13.
Rhonda's monthly income is $2,000, her monthly expenses are $2,800, and her debts are nearly $40,000. A debtor in Rhonda's position who files for bankruptcy would most likely seek relief under...
Chapter 7
Regional Stores, Inc., files for bankruptcy. A corporation can file a petition for bankruptcy under...
Chapter 7 or Chapter 11.
Eve possesses an instrument that is "payable to bearer." She loses it. Fred, a known evil doer, finds it on this instrument. Fred may,
Collect Payment
Bill transfers an instrument to Harry by assigning his rights in the instrument to Harry. This transfer is governed by
Contract law
A blank indorsement converts a bearer instrument to an order instrument
False
A payee whose name is misspelled on an instrument cannot indorse the instrument
False
A person who receives an instrument as a gift normally possesses the rights of an HDC
False
A promise to give value in the future is normally sufficient to confer the rights of an HDC on one in possession of a negotiable instrument
False
An instrument payable to two persons (jointly) requires the indorsement of only one of the payees for negotiation
False
An order instrument is negotiated by delivery alone
False
Fraud in the execution occurs whenever someone signs an instrument before all essential terms have been completed
False
Ira and Jill agree to act as guarantors on a loan made by Ken. Ken defaults on the payments and Jill refuses to pay. If Ira pays the debt, he can recover from...
Ken under the right of subrogation and Jill under the right of contribution.
International Properties Inc. (IPI) signs an Instrument in favor of Financial Investments Corp that includes the statement "IPI plans to pay this debt form the proceeds of the sale of the IPI Office Building in Montreal." this instrument is
Negotiable
To borrow money to finance the start up of her consulting business, Barb executes an instrument in favor of First National Bank. For the instrument to be negotiable, Barb's signature
None
Ann is the payee of the bearer instrument: Promissory note in the amount of $10,000. Burt offers to irrigate Ann's ranch next week in exchange for the note today. Ann agrees to deliver the note to Burt. Burt is:
Not an HDC, because he did not yet give value for the instrument
To borrow the money to buy a car, Klaus signs a not "payable to the order of Lake City Auto Financing." Minnie cosigns the note to guarantee the repayment of the loan, making her accommodation maker. Minnie's liability on this note is:
Primary
Bill an accountant, gives his nephew Tad a check for $500 as a graduation present. The check was given to Bill as payment for work to be done for a client. Bill, who indorses the check "without recourse" knows that the work has not yet been done, but Tad does not. Who is an HDC of the check?
Tad only
Perfect Roofing Company receives a check from Quick Mart for fixing its roof, an indorses the check to Repair Supplies, INC. (RSI) Sam, RSI's owner, gives the check to Todd as a gift. In his situation, the party who is not on HDC of the check but who acquires HDC rights under the shelter principle is
Todd
A holder takes an instrument for value if he or she gives a check as payment for it
True
The shelter principle may apply to anyone who can directly trace his or her title back to an HDC
True
Universal defenses defeat the payment claims of Holders, HDC, HHDC's
True
United Sale Company is incorporated in Virginia, with its CEO office in the state of Washington. Using its equipment as collateral, United borrows $5,000 from Zip Credit, Inc. To perfect its security interest, Zip needs to file its financing statement in...
Virginia only.
Dick buys a computer by executing a promissory note in favor of Excel Computers, Inc, is secured by Dick's stock in Fine Oil Company. The note is
a collateral note
Denny owns Eaters Cafe, which he uses as collateral to borrow $10,000 from First State Bank. To be effective, the security agreement must include...
a description that reasonable identifies the collateral and Denny's signature.
Alpha Company issues a trade acceptance with itself and Beta Company as parties. A trade acceptance is
a draft
Dependable Corporation asks Eagle Company to agree to a security agreement that provides for coverage of the proceeds from the sale of after-acquired property. This is...
a floating lien.
Elin owes First State Bank $40,000, secured by a mortgage on Elin's Retail Store. Elon fails to make payments on the loan. To obtain the amount that is owed, the bank can use...
a foreclosure.
Eagle Company wants to borrow money from First State Bank. The bank insists that Holly, Eagles's president, agree to be personally liable for payment if Eagle defaults. Holly agrees. She is...
a guarantor only.
Lauren transfers an instrument to Miguel in a form and by a means that makes Miguel a 'holder'. This is:
a negotiation
Eagle Company hires Fran, who holds herself out as possessing special accounting skills, to act as its agent. As an agent, Fran must use the degree of skill or care expected of...
a person having those special skills.
Nina is appointed trustee of Owen's estate in bankruptcy. To collect the property of Owen's estate, Nina can set aside...
a transfer within 90 days prior to the petition's filing in preference to one creditor.
Aaron owes Barb $500 but he refuses to pay. To collect, Barb files a suit against Aaron and wins. Aaron still refuses to pay. To collect the amount of the judgment, Barb can use...
a writ of execution.
Leif is an officer for Major Corporation. When acting for Major in ordinary business situations, Leif is...
an agent only.
Velma transfers a note by signing it and delivering it to Woz, Woz is
an indorsee
Burt pays Carol $100 in the form of a personal check. After Carol transfers the check to Denis by signing her name on the instrument, she is
an indorser
Tony signs a promissory note in favor of United Freight Company, on whose behalf Van attempts to obtain payment. A negotiable promissory note is
an unconditional promise to pay the holder of the note
To purchase office supplies for medical clinic, Becky executes a draft in favor of Sonya. A draft is
an unconditional written order to pay
Great Trucks, Inc. (GTI), repossesses a truck (not a consumer good subject to a purchase-money security interest) from Highway Transport company, and decides to keep it instead of reselling it. GTI sends written notice of this intent to the debtor. GTI must also send notice to...
any junior lien claimant who has file a statutory lien or security interest and any secured party from whom GTI has received notice.
If Ben signs both his name and Carol's name on the check to buy the property with nothing on the instrument that he is Carol's authorized agent, then he may
be personally liable on the check
If Ben signs his name followed by the word "agent" on the check without identifying Carol, then he may
be personally liable on the check
Myra gives Noel the impression that Opal is Myra's agent, when in fact she is not. Noel deals with Opal as Myra's agent. Regarding any agency relationship, Myra...
cannot deny it.
Dandy Electronics Stores sell consumer products. To create a purchase-money security interest in a computer bought by Elmo, Dandy must...
extend credit for part or all of the purchase price of the computer.
Pat files a Chapter 7 petition for a discharge in bankruptcy. Pat may be denied a discharge if Pat...
fails to explain a loss of assets.
a draft is a conditional written order that involves two parties
false
a notation on a check that it is "nonnegotiable" render that check nonnegotiable
false
a notation on an instrument that is negotiable renders that instrument negotiable
false
a promissory note cannot be a negotiable instrument
false
an instrument is nonnegotiable unless the word negotiable is printed on it
false
for a negotiable instrument to serve as a substitute for money, it must be payable in gold
false
on a trade acceptance, the drawee is also the payee
false
rubber stamp signatures, though commonly used in the business work, are not typically viewed by the courts as legally binding signatures
false
Davy borrows money from EZ Credit, Inc. Davy defaults. To use attachment as a remedy, EZ must first...
file a suit against Davy.
Opal asks Paolo, who does not understand English, to sign what Opal says in an application to open a bank account. In fact, the "application" is a note. If sued on the note by an HDC, Paolo's best defense would be
fraud in the execution
As a bankruptcy trustee, Mica has the power to avoid...
fraudulent transfers, preferences, and transactions the debtor could rightfully avoid.
Ed's $2,500 debt to Owen is past due. To collect money from Ed's wages to pay the debt, Owen can use...
garnishment.
Home Interiors, Inc. (HII), tells Jen, whose business is purchasing for others, to select and buy $200 worth of certain goods and ship them to HII's office. Jen buys the goods from Brand Name Products Store and ships them as directed, keeping an account for the expense in HII's name. HII and Jen...
have an agency relationship.
Quick Credit, Inc., has a security interest in the proceeds from the sale of collateral owned by retail Stores Company. This interest may remain perfected for longer than 20 days after Retail receives the proceeds...
if a filed financing statement covers the proceeds or the proceeds are identifiable cash proceeds.
Gail agrees to act, without compensation, as a surety for Hal's loan from Interstate Credit. Later, without Gail's knowledge, Hal and Interstate agree to extend the time for repayment and to increase the interest rate. Gail's obligation...
is discharge completely.
Leo agrees to act, without compensation, as a guarantor for Mary's loan from Nick. Collateral for the loan is Mary's car, which Mary give to Nick Later, without Leo's knowledge, Mary and Nick agree to increase the interest rate and Nick returns the car to Mary. Leo's obligation...
is discharged to the extent of any loss caused by surrender of the car.
Doug agrees to act as an agent for Great Sales Corporation (GSC) on a commission basis. The agreement does not call for Doug to pay expenses out of his commission. GSC is required to...
keep records, account to Doug, pay him according to the agreement, and reimburse him for authorized expenses.
Fran leaves her necklace with Gold Jewelers to be repaired. When Fran returns for the necklace, she says, "I'll pay for the repair later." Gold can...
keep the necklace until Fran pays.
Pat asks Quinn, a real estate broker, to sell her land. Quinn learns that Retail Mall Corporation (RMC) is willing to pay a high price for the land. With telling Pat about RMC, Quinn says that he will buy the land himself. Instead, however, Pat sells the land to Sam. Quinn sues Pat. Quinn will...
lose, because Quinn breached his duty to Pat.
Ezra, a salesperson at Fancy Electronics Company, tells Gert, a customer, "Buy your computer here, and I'll set it up for less than what Fancy would charge." Gert buys the computer, Ezra sets it up, and Gert pays Ezra, who keeps the money. Ezra has breached the duty of...
loyalty.
Weston, the president of El Camino Tools, habitually leaves the payroll checks in the open. Illena, an employee, forges Weston's signature on a check and cashes it. Weston
may be obligated to pay the check if his carelessness is leaving the checks in the open facilitated for forgery
Ferdinand owes $8000 in unpaid taxes. Using the back of an old shirt, he executes an instrument for $8000 that otherwise meets the requirements for negotiability. The instrument is likely
negotiable
Pat signs an instrument that states it is being executed " as per a contact for the sale of four thousand barrels of oil dated April 15" This instrument is
negotiable
Suzanne signs an instrument using an S with a circle around it. With this mark for a signature, the instrument is
negotiable
Johns oral promise to pay $300 to Paul is not negotiable instrument because
negotiable instruments must be in written form
Standard Company and Trudy wish to enter into an agency relationship for the purpose of buying computers for Standard's offices. this relationship requires...
neither a written agreement nor consideration.
Steve signs an instrument promising to pay 100 pounds in gold bullion to Tina. This instrument is
nonnegotiable because gold bullions is not "a medium of exchange authorized or adopted by a domestic or foreign government as part of its currency"
Tony writes on a piece of paper "I owe you $500" signs it, and gives it to Lane. That instrument is
nonnegotiable because it does not include an express promise to pay
Josephine owes $7,000 to Fred. Using the flank of her prized sow, she executes an instrument for $7000 that other-wise meets the requirements for negotiability. This instruments is likely
nonnegotiable, because a pig is not freely transferable
Storage Warehouse, Inc. (SWI), buys a forklift, but does not make a payment on it for 5 months. The seller, Tool & Equipment Company (T&E), repossesses it by towing it from a public street. SWI sues T&E for breach of the peace. Able will likely...
not prevail because T&E's repossession was not a breach of the peace.
Diners Restaurant issues an instrument in favor of General Supplies Inc...For the instrument to be negotiable, it need not
recite the consideration given in exchange for a promise to pay
Bob files a bankruptcy petition under Chapter 7 to have his debts discharged. Assuming Bob passes the appropriate test, the debts most likely to be discharged include claims for...
student loans, if the payment would impose undue hardship on Bob.
Carol is a salesperson who works for Delta Product, Inc. In determining whether Carol is Delta's employee or an independent contractor, the most important factor is...
the degree of control that Delta exercises over Carol.
Doug writes a check for $100 payable to Eve on his account at First State Bank. The bank is
the drawee
Careful Credit Corporation files a financing statement regarding a transaction with Design Services Company. To be valid, the financing statement must contain all of the following except...
the reason for the transaction.
Safe-T Loans, Inc., wants to perfect its security interest in collateral owned by Tech Products Corporation. Most likely, Safe-T should file a financing statement with...
the secretary of state.
a cashier's check drawn by a bank on itself is an instrument in which the bank is both the drawer and the drawee
true
a certificate of deposit represents a loan, by the payee ,to a bank or savings/loan
true
a primary function of commercial paper is to serve as a substitute for money
true
a thumbprint made on a document with the intent that it serves as a valid signature will be legally valid if it is witnessed
true
all checks are drafts
true
for an instrument to be negotiable, it must be in writing
true
Dora and Ed make down payments on goods to be received from Fine Furniture Store. Before the goods are delivered, Fine files for bankruptcy. Besides consumers like Dora and Ed, Fine owes wages to its employees and taxes to the government. The order in which these debts will be paid is...
unpaid wages, consumer deposits, and taxes.
Luke borrows $5,000 from Modern Financial Corporation (MFC), which files a financing statement on May 1, but does not sign a security agreement until he receives the funds on May 5. Luke also borrows $5,000 from National Bank, which advances funds, files a financing statement, and signs a security agreement on May 2. Luke uses the same property as collateral for both loans. On Luke's default, in a dispute over the collateral, MFC will...
win because MFC filed first.