Legal Business Law Exam 3

To pay for investment advice from financial consultants Smith and Jones, Tony signs a check payable to "Smith or Jones." A proper indorsement of the check is:

"Smith" only, or "Jones" only, or "Smith" and "Jones."

Edie signs a check payable to the order of First Federal 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:

$1,000.

A system or place where banks exchange checks and drafts drawn on each other and settle daily balances is referred to as a(n):

clearinghouse.

If an instrument is payable to bearer, it is negotiated by

delivery

If an instrument is an order instrument, it is negotiated by:

delivery with any necessary indorsements.

If the instrument is an order instrument, it is negotiated by:

delivery with any necessary indorsements.

The main focus of Article 4 of the UCC is:

establishing a framework for banking relationships.

Under the Electronic Fund Transfer Act, a bank must provide a monthly statement for every month in which there is an electronic transfer of funds; this statement must show:

the amount and date of the transfer. the names of the retailers or other third parties involved. the location or identification of the terminal.

Dandy Furniture Store borrows $100,000 at 6 percent interest from Easy Loan Company and signs a promissory note for that amount. Easy changes the amount of the note to $120,000 and increases the rate to 8 percent. Easy materially altered the note when it changed:

the amount and the interest rate.

These warranties attempt to shift liability either back to a wrongdoer or the person who dealt face to face with the wrongdoer.

Both presentment and transfer warranties.

When a customer opens a checking account and deposits funds in a bank:

a debtor-creditor relationship is established. a contractual relationship is established. an agency relationship is established.

Ida executes an instrument in favor of Joy that states, "The holder of this note at the date of maturity, July 1, 2007, can extend the time of payment indefinitely, if the holder so desires." After July 1, 2007, this instrument is:

a demand instrument.

Doug writes a check for $100 payable to Eve on his account at First State Bank. The bank is:

a drawee.

Petra signs a check payable to Quincy, who indorses the back, gives it to Regional Credit Union, and receives cash. The transfer of the check from Quincy to the credit union is:

a negotiation.

The Federal Reserve System, which clears many checks in the United States, is:

a network of 12 district banks located around the United States and headed by the Federal Reserve Board of Governors.

Jane orally promises to pay $400 to Ken. This is:

a nonnegotiable instrument, because it is not in writing.

When a statute provides that an illegal transaction is voidable:

a personal defense against an ordinary holder exists.

Ewa signs an instrument unconditionally promising to pay to "First State Bank" $5,000 with interest in installments with the final payment due June 1, 2012. The instrument that Ewa signed is most likely:

a promissory note.

To pay for improvements to Diners Cafe, Earl executes a negotiable instrument in favor of First County Bank. They are the only parties to the instrument. A negotiable instrument that has only two parties is:

a promissory note.

Jack receives a check from Kappa Company and indorses it "without recourse." This indorsement is:

a qualified indorsement.

Dora receives a check from Eagle Corporation. Dora indorses the check to First National Bank by writing "pay to First Nat'l Bank only" and signing her name. This is:

a restrictive indorsement.

Gina writes and signs a check payable to "Happy Market." Irma, Happy's manager, indorses the check "For deposit only." This is:

a restrictive indorsement.

City Bank agrees to honor Delta, Inc.'s checks even when its account has insufficient funds. Edie, Delta's bookkeeper, writes the checks. Later, the bank refuses to pay an item payable to Fine Supply Company that would create an overdraft. This is:

a wrongful dishonor.

When an instrument is presented in a timely manner for payment or acceptance and payment or acceptance is refused, the instrument has been:

dishonored.

Antedating:

does not make a check nonnegotiable

The UCC specifies several types of negotiable instruments. They include:

drafts. checks. promissory notes.

A transfer of funds with the use of an electronic terminal, a telephone, a computer, or magnetic tape is called a(n):

electronic fund transfer.

All of the following are examples of personal defenses, except:

extreme duress.

The most common reason for improper presentment is:

failure to present an instrument on time.

When a person causes an instrument to be issued to a payee who will have no interest in the instrument, the payee is called a(n):

fictitious payee.

The time between when a check is written and when the amount is actually deducted from an account is called:

float.

One universal defense to liability for payment on a negotiable instrument is:

forgery.

Pola wants to transfer a check to Quin. The check is defective if it:

has been previously dishonored.

Nina wants to transfer a check to Opie. The check is not defective if it:

has been previously honored.

Discharge from liability on an instrument can occur if a:

holder impairs another party's right of recourse. holder surrenders collateral without consent. party reacquires an instrument.

Holly writes a check on her account at InterBank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly. Kelly can obtain payment of the check from Jerry:

if InterBank dishonors the check and Kelly timely notifies Jerry.

Discharge from liability on an instrument can occur:

if a party impairs another party's right of recourse.

Negotiation is the transfer of an instrument:

in such form that the transferee becomes a holder.

Baxter obtains a check payable to his order from Chanel. For Baxter to negotiate this order instrument to Darlene requires:

indorsement and delivery.

When tender of payment is made to a person entitled to enforce a negotiable instrument, and tender is refused:

indorsers and accommodation parties are discharged to the extent of the amount of the tender.

An instrument can be cancelled by:

intentionally writing "paid" across its face. intentionally tearing it up.

Bearer instruments:

involve a greater risk of loss or theft than the use of order instruments.

A person who does not qualify as a holder in due course but who derives his or her title through a holder in due course can acquire the rights and privileges of a holder in due course if the transfer:

is by either gift or negotiation.

Standard Wholesalers, Inc., asks United Purchasing Company to pay for goods with a certified check. A certified check:

is guaranteed by a bank.

A person will not qualify for HDC protection if he or she is on notice that the instrument being acquired:

is overdue.

If a check is not dated:

its date is the date on which the drawer first delivers it to another person to give that person rights on the check.

All of the following are examples of universal defenses, except:

lack of consideration.

Dan writes a check to Eve on his account at First State Bank. The bank dishonors the check even though Dan has sufficient funds in his account. The bank is:

liable to Dan only.

First National Bank agrees to honor Glen's checks even when his account has insufficient funds. Later, the bank refuses to pay an item payable to Holly that would create an overdraft. The bank is:

liable to Glen only.

Primary liability on a negotiable instrument is assumed by the:

maker.

Moe, the owner of National Sales Company, stores blank National checks in an unlocked office drawer. Owen, an employee, forges Moe's signature on one of the blank checks and indorses it to Payday Loans, Inc. With respect to Payday, Moe:

may be liable if the storage of the checks facilitated the forgery.

Mike loses his National Bank access card. He realizes his loss the next day but waits a week to call National. Meanwhile, Opal finds and uses Mike's card to withdraw $3,000 from Mike's account. When Mike receives his National statement, he demands that the bank investigate the matter and recredit his account. The bank:

must investigate and, if the dispute is not resolved within 10 days, recredit Mike's account (at least until the dispute is resolved).

A check written for a purchase in a store is a:

negotiable instrument.

Bree, the chief financial officer of Computer Equipment Company, signs an instrument that includes the phrase "this debt arises from the sale of sixteen servers." This instrument is:

negotiable.

Jackson pays Phil in good faith for a promissory note. Phil warrants that the draft has not been altered. This is a:

presentment warranty.

Don writes a check to Eve drawn on Don's account at First Bank. Eve presents the check for payment to First Bank, which accepts it. The bank is:

primarily liable for payment.

In order to be negotiable, a promissory note does not require that the:

promise in the note be made orally.

On Monday, Bob deposits into his account at City Bank a $500 check from Dina, who also has an account at City Bank. On that same day, this check is considered:

provisionally credited.

Finest Business Company 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.

On the back of a check payable to Nero, he writes "Pay to Odell, without recourse" and signs it. This:

relieves Nero of liability on the check.

Holly writes a check on her account at InterBank to Jerry to pay a debt. Jerry negotiates the check by indorsement to Kelly. With respect to payment of the check, Holly is:

secondarily liable.

A person who does not qualify as a holder in due course but derives his or her title through an HDC can acquire the rights and privileges of an HDC by means of the shelter principle; this principle is:

set out in the UCC.

A person who does not qualify as a holder in due course but derives his or her title through an HDC can acquire the rights and privileges of an HDC by means of the:

shelter principle

A person who does not qualify as a holder in due course but who derives his or her title through a holder in due course can acquire the rights and privileges of a holder in due course. This rule is called the:

shelter principle

Samantha wrote a check to pay for a DVD player she purchased at an electronics store. However, when she got it home she discovered that it would not play Blu-Ray DVDs which was the kind she asked for. Immediately, she called her bank and ordered a(n):

stop-payment order.

A holder in due course is a holder who:

takes an instrument free of most of the defenses and claims that could be asserted against the transferor.

Liability is discharged by a holder:

tearing up the instrument. writing "Paid" across the instrument. crossing out a party's signature.

Tom draws a check on his account in State Bank in New York payable to Digital Computers, Inc., in San Francisco. Digital deposits the check in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. The Federal Reserve Bank sends the check to State Bank. Unless Tom's bank dishonors or returns the check, it would be accountable for:

the amount of the check but not the transfer cost.

Lynn loses three checks from her checkbook: #536, #537, and #538. She requests and executes a written stop-payment order with her bank, ordering the bank not to pay these checks. Three months later, her bank pays check #537 in the amount of $1,500, causing Lynn's account to be overdrawn. In this situation:

the bank is liable.

First State Bank pays a check on which has been forged the signature of the drawer, Greg, who is a First State customer. First State must recredit Greg's account for the entire amount of the check if:

the bank's negligence substantially contributed to the forgery.

When a customer makes a deposit:

the customer becomes a creditor and the bank a debtor.

Tom draws a check on his account in State Bank in New York payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the check to State Bank. Digital's bank is:

the depositary bank.

A depositary bank is:

the first bank to receive a check for payment.

The UCC requires that HDCs take instruments in good faith. This means that:

the holders must have acted honestly and observed all reasonable commercial standards of fair dealing.

When an indorser of a negotiable instrument pays the full amount due to a holder:

the indorser and subsequent parties are discharged.

All of the following are examples of presentment warranties except:

the instrument has not been dishonored.

Parties are secondarily liable on a negotiable instrument only if:

the instrument is properly and timely presented. the instrument is dishonored. timely notice of dishonor is given to the secondarily liable party.

In order for an instrument to be negotiable, the UCC requires that it be signed by:

the maker or the drawer.

There are two methods of negotiating an instrument so that the receiver becomes a holder, and:

the method used depends on whether the instrument is an order instrument or a bearer instrument.

The liability of all parties to an instrument is discharged when

the party primarily liable on it pays to the holder the full amount due.

Ewa signs an instrument unconditionally promising to pay to "First State Bank" $5,000 with interest in Installments with the final payment due June 1, 2012. With respect to this instrument, First States Bank is:

the payee.

Tom draws a check on his account in State Bank in New York payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. The Federal Reserve Bank sends the check to State Bank. Tom's bank is:

the payor bank.

The following presentment warranty is made by a person who presents an instrument for payment:

the person obtaining acceptance is authorized to obtain acceptance or payment on behalf of a person entitled to enforce the instrument.

Owen is a holder of a promissory note obtained from Purchase Money, Incorporated. Regarding the defenses against payment of the note to which Purchase Money is subject, Owen, as an ordinary holder, is subject to:

the same defenses.

One who transfers an instrument for consideration makes all of the following warranties to all subsequent transferees and holders who take the instrument in good faith, except:

the transferor is not entitled to enforce the instrument.

Alpha Office Properties signs a check payable to Beta Landscape Design, Inc., drawn on Alpha's account at City Bank and dated June 1. Beta indorses the check to Delta Lawn Care Corporation. To hold Alpha secondarily liable, Delta must present the check for payment within:

thirty days of its date.

If a seller of goods is both the drawer and the payee of a draft, the drawer has created a:

trade acceptance.

Bree, an agent for Cleo, enters into a deal with Dining, Inc., to buy Eats Café. If Bree signs both her name and Cleo's name on a note to buy Eats without noting on the instrument that she is Cleo's authorized agent, then Bree is most likely personally liable on the note:

under any circumstances.

Bree, an agent for Cleo, enters into a deal with Dining, Inc., to buy Eats Café. If Bree signs only her name on the note without noting that she is Cleo's agent, then Bree is most likely personally liable on the check:

under any circumstances.

whether it is a check or a note.

under any circumstances.

A defense that is valid against all holders of a negotiable instrument is called a:

universal defense.

The fact that an instrument is undated does not affect its negotiability:

unless the date of an instrument is necessary to determine a definite time for payment.

State Bank receives a check drawn by Tricia. The check is received after the established "cutoff" hour. Payment can be postponed without dishonor:

until the close of the next business day.

Material alteration is:

a complete defense against an ordinary holder.

Vladimir negotiates a bearer instrument to Wendy by:

delivery.

The first bank to receive a check for payment is the:

depositary bank.

The UCC article that deals with negotiable instruments is:

Article 3.

Intentional cancellation of an instrument discharges the liability of:

all parties.

Dan signs a check payable to Eagle Investors, Inc., and gives it to Eagle, leaving the amount blank but authorizing Eagle to fill in the check for $1,000. Eagle fills in $1,500 and negotiates the check to First State Bank, to whom Eagle owes $1,500. First State, an HDC, can enforce the check for:

$1,500.

Dina's debit card, issued by Eagle Bank, is stolen and used without Dina's permission. Dina tells Eagle Bank within 30 days. Dina may be required to pay no more than:

$500.

Mike loses his National Bank access card. He realizes his loss the next day but waits a week to call National. Meanwhile, Opal finds and uses Mike's card to withdraw $3,000 from Mike's account. Mike is responsible for:

$500.

Ann orders 100 imprinted pens from Best Ad Art for which she draws a check on County Bank for $100. Ann accepts the first shipment of 10 pens, refuses to accept future shipments, and issues a stop-payment order. County Bank pays the check. Ann can recover from the bank:

$90.

After Ben's death, his heir Cathy asks his secretary Edie to notify Ben's bank, First National Bank. On being notified, First National can pay or certify checks drawn by Ben, on or before the date of his death, unless Cathy asks to stop all payments for:

10 days after the date of death.

The UCC's Article 3 provides rules for interpreting ambiguous terms of a negotiable instrument. The following is not one of them:

A check is nonnegotiable if it has a notation on it that it is nonnegotiable.

A warranty for the following would be a transfer warranty.

All signatures are genuine

When a customer writes a check on her account, what kind of legal relationship arises between the bank and the customer?

An agency relationship

In the event that a conflict arises between the provisions of Article 3 and Article 4 of the UCC:

Article 4 controls.

Candice writes a check drawn on First Unity Bank to Brittanie. Brittanie deposits the check in her bank, Standard Federal. An agency relationship is created between:

Candice and First Unity Bank, and Brittanie and Standard Bank.

Which of the following is not a potential online banking service?

Cashing checks

Which of the following would not warrant a discharge from liability on an instrument?

Drawing a red line across the instrument to indicate it has been checked by an auditor

Ann is the maker of a $1,000 promissory note in favor of Bob. Bob indorses the note to Cody who, in turn, indorses it to Dru, the present holder. If the note is dishonored, the party entitled to recover payment from Cody is:

Dru.

Edgar possesses a check that is "payable to cash." Fawn steals the check and delivers it to Godfrey, an innocent third person. All rights to the check are:

Godfrey's.

Jake is the maker of a $2,000 promissory note payable to Kim. Kim indorses the note to Lou who, in turn, indorses it to Mona, who then indorses it to Nat, the present holder. Suppose that Mona pays Nat on the note. With timely notice to the proper parties, Mona may collect payment on the note from:

Jake, Kim, or Lou

Sarah blackmailed Sam into signing over a check made out to Sam for $3,000. Sam had stolen the check from Jane. Jane had obtained the check from Linda for value, in good faith, and without notice that it was defective. Who would have the rights and privileges of a holder in due course?

Jane only.

Jason made a cash deposit into his checking account at First National Bank. As a result:

Jason becomes a creditor and the bank a debtor for the amount deposited.

Jay is the holder and payee of a check drawn by Karen on Local Bank. Jay takes the check to the bank to have it certified. After certification:

Karen is discharged on the check.

Jake is the maker of a $2,000 promissory note payable to Kim. Kim indorses the note to Lou who, in turn, indorses it to Mona, who then indorses it to Nat, the present holder. Nat properly presents the note to Jake for payment, but Jake dishonors it. With timely notice to the proper parties, Nat may collect payment on the note from:

Kim, Lou, or Mona.

Julian receives a promissory note from his grandmother as a birthday present. Is Julian a holder in due course (HDC) with respect to the note?

No, because the note was a gift.

With a cashier's check, which party is both the drawer and the drawee?

The bank

Lee issues a promissory note to Rosalyn, in connection with goods he purchased from her. The note, which is otherwise negotiable, is payable in one year and states that it is "with interest." Which statement is correct?

The promissory note is payable with interest at the judgment rate.

Which of the following IS NOT a transfer warranty?

The transferor may not enforce the instrument.

Alice's checks include a line "PAY TO THE ORDER OF ______________________________." In the blank space, she inserts "Randy Main or bearer." Which statement is correct?

This is a bearer instrument.

Ray signs a promissory note for $10,000 in favor of State University (SU). The note does not specify the date of its payment. Ray defaults. In SU's suit to collect on the note, the court will most likely rule in favor of:

Ray, because the note is not payable at a definite time or on demand.

A set of rules issued by the Federal Reserve System's Board of Governors to protect users of electronic fund transfer systems is referred to as:

Regulation E.

Rodeo Ranch's agent Slim is authorized to draw checks on Rodeo Ranch's account in Town Bank. Upper Range Corporation is a Rodeo Ranch's supplier. Slim writes a check "pay to the order of Upper Range [signed] Slim," indorses the check in Upper Range's name, and deposits it in his account in Verity Bank. If Verity Bank collects payment, the ultimate party most likely to suffer the loss is:

Rodeo Ranch.

Ruth opens an account with State Bank under an agreement in which the bank reserves the right to charge the account for any item returned due to its unauthorized alteration. Tom deposits an altered check in Ruth's account. When Unity Bank, the check's drawee bank, returns the item due to its alteration, State Bank files a suit against Ruth to recover the amount. The court is most likely to rule that:

State Bank is entitled to recover under its account agreement.

Perfect Roofing Company receives a check from Quik Mart for fixing its roof, and indorses the check to Repair Supplies, Inc. (RSI) for materials previously supplied. Sam, RSI's owner, gives the check to Todd as a gift. In this situation, the party who is not an HDC of the check but who acquires HDC rights under the shelter principle is:

Todd

On July 1, Chris writes a check to pay Bob's Tree Service to cut down a tree on Chris's lawn. Because of other checks he has written, the money to cover the check to Bob won't be in Chris's account until Chris's paycheck is direct deposited on July 5. Chris therefore dates the check for July 6. Notwithstanding the date, Bob takes the check to the bank immediately, which cashes it. As a result, other checks which Chris had written are dishonored and he is charged penalties and interest.

Unless Chris had previously told the bank otherwise, it was free to honor the check written to Bob on July 1, when Bob cashed it.

Superior Company draws a check payable to Ted. Uri makes a note payable to Vital Finance Corporation. Primarily liable parties include:

Uri only.

Nero signs a check "pay to the order of Olive" drawn on Nero's account in Plum Bank. Olive signs the back of the check. Is this sufficient to be considered a signature on the check?

Yes, because a handwritten statement on the body of the instrument is sufficient to be considered a signature.

Mike receives a payroll check from National Computer Systems, Inc., and indorses it by signing his name on the back of the check. This is:

a blank indorsement

An indorsement that specifies no particular indorsee and can consist of a mere signature is called:

a blank indorsement.

In negotiable instruments law, the drawee's signed agreement to pay a draft when it is presented is referred to as a(n):

acceptance.

Discharge from the liability on an instrument can occur for all of these but:

accidental destruction of the negotiable instrument.

Diner's Café receives daily shipments of dairy products from Eagle Dairy, Inc. The price is $900 per month. Diner's pays for one month and an additional five months in advance with a note for $5,400. One month later, Eagle sells the note to First National Bank for $5,100. At the time the note is sold, Eagle is:

an HDC for $900.

When a customer writes a check on his or her account:

an agency relationship is established.

When a transfer fails to qualify as a negotiation because it fails to meet one or more of the requirements of a negotiable instrument, it is treated as:

an assignment

Burt pays Carol $100 in the form of a personal check. After Carol transfers the check to Dennis by signing her name on the instrument, she is:

an indorser.

Suppose that you receive a check from your mother. You sign the check on the back and transfer it to your friend, Kit, in payment for some of Kit's used books. When you signed the check on the back, you became:

an indorser.

Funds contained on computer software, in the form of secure programs stored on microchips and on other computer devices, is called:

digital cash.

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy is:

an ordinary holder.

Kris transfers a note, on which Liu is the maker, to Mia, who takes it for value and in good faith. Mia knows that Kris breached the contract underlying the note, giving Liu a defense against payment. With respect to this note, Mia is:

an ordinary holder.

Thelma signs a check "pay to the order of Uri" drawn on Thelma's account in Verity Bank. Thelma has $400 in her account but the amount of the check is $500 which the bank pays. This is:

an overdraft.

Tom draws a check on his account in State Bank in New York payable to Digital Media, Inc., in San Francisco. Digital deposits the check in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. The Federal Reserve Bank sends the check to State Bank. When Digital's bank received the check, it was required to pass it on:

before midnight of the next banking day.

Juan Cortez writes a check payable "to the order of Sue and Jason Fisher." In order to be negotiated, this check requires the indorsement of:

both Sue Fisher and Jason Fisher.

Alpha Company gives a $3,000 promissory note to Best Delivery Service to deliver a load of computer chips to Alpha's plant. The chips are contaminated during transit, and are useless to Alpha on delivery. Alpha's best defense to payment on the note is:

breach of warranty.

If Bethany Lewis receives a check payable to the order of Bethanie Louis, she:

can indorse the check either "Bethany Lewis" or "Bethanie Louis."

An indorser of a negotiable instrument who pays the full amount due to a holder:

can recover on the instrument from any prior party.

Presentment warranties:

cannot be disclaimed with respect to checks.

Certain persons who formerly held instruments

cannot improve their positions by later reacquiring the instruments from holders in due course.

Cashier's checks are sometimes used in the business community as nearly the equivalent of:

cash.

A check drawn by a bank on itself is referred to as a:

cashier's check.

A check that has been accepted in writing by the bank on which it is drawn is referred to as a:

certified check.

First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considered:

certified.

The Expedited Funds Availability Act of 1987 and Regulation CC require that any local check deposited must be available for withdrawal by:

check or as cash within one business day from the date of deposit.

A draft drawn by a drawer ordering the drawee bank or financial institution to pay a fixed amount of money to the holder on demand is a:

check.

The most common type of negotiable instrument is a:

check.

Eve possesses an instrument that is "payable to bearer." She loses it. Fred finds it. On this instrument, Fred may:

collect payment.

Any bank handling an item for collection, except the payor bank, is referred to as the:

collecting bank.

All of the following are types of negotiable instruments except:

conditional promises to pay.

All of the following would be an example of a material alteration to an instrument except:

correcting the maker's address on the instrument.

Pat, the manager of Quik Mart, deposits the store's receipts in its account at Regional Bank. As to the receipts, the relationship between Quik Mart and the bank is:

creditor and debtor.

Order instruments are negotiated by:

delivery with the necessary indorsement.

Roderick negotiates a bearer instrument to Shauna by:

delivery.

International Properties, Inc. (IPI), signs an instrument in favor of Financial Investments Corporation that includes the statement "IPI plans to pay this debt from the proceeds of the sale of the IPI Office Building in Montreal." This instrument is:

negotiable.

Julie signs a check payable to the order of Kwik-Mart Stores, Inc., that does not include a date. This check is:

negotiable.

On May 1, Doug signs a check that is payable to the order of Extra Credit Corporation and that is dated July 1. This check is:

negotiable.

Pam signs an instrument payable to the order of Quick Credit, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Pam fails to make a payment. This instrument is:

negotiable.

A person who does not qualify as a holder in due course but who derives his or her title through a holder in due course can acquire the rights and privileges of a holder in due course:

no matter how far removed from the holder in due course, as long as he or she can ultimately trace title back to a holder in due course.

Carl gets a $100 check as a gift from Donna. Carl crudely increases the amount of the check to $1,000—an obvious forgery—and transfers it to Eagle Computers, Inc., in exchange for a computer. Eagle deposits the check in its bank account at First National Bank. HDCs of this check include:

none of these parties

On behalf of Financial Investments, Inc., Gail signs an instrument promising to pay $5,000 in gold to High Funds, Inc., on April 15. This instrument is:

nonnegotiable, because gold is not "a medium of exchange authorized or adopted by a domestic or foreign government as part of its currency."

EZ Credit Company signs an instrument payable to the order of Flem that states, "The maker of this note at the date of maturity, May 1, 2013, can extend the time of payment, but for no more than a reasonable time." This instrument is:

nonnegotiable, because it is not payable within a definite time.

Rita owes $6,000 in unpaid taxes. In the sand of Seaside Beach, she sketches an instrument for that amount that otherwise meets the requirements for negotiability. This instrument is likely:

nonnegotiable, because sand is not sufficiently permanent.

Bruce acquires a series of installment notes that are all identified with the same indebtedness. At the time of his acquisition, he learns that the maker defaulted on one of the payments. Bruce is:

not an HDC.

Quinn writes a check to Ron on May 1 that is drawn on his account at State Bank. Ron presents the check on December 15. The bank is:

not obligated to pay the check under any circumstances.

Postdating a check:

occurs when a party puts a date on the instrument that is after the actual date.

Christopher receives his check from Wild River Country, endorses it, takes a picture of it on his cell phone, and uses his cell phone to send the check to First American Bank for deposit. This is an example of:

online banking.

To certify a check, the bank writes or stamps the word certified on the face of the check and typically writes the amount that it will:

pay.

The bank on which a check is drawn is known as the:

payor bank.

The bank on which the check is drawn is the:

payor bank.

A type of EFT system that allows consumers to transfer funds to merchants to pay for purchases using a debit card is called a(n):

point-of-sale system.

Jon is about to travel to Turkey to visit a former classmate who studied in the U.S. at the university where Jon studied. To have money on the trip which is protected from theft, Jon purchases traveler's checks at the bank, and signs them while the teller watches. Jon will have to sign them again at the time they are:

used.

A stale check is one that:

was not presented for payment within six months of its date

On the basis of breach of warranty, a holder who takes an instrument in good faith can sue:

when she or he has reason to know of the breach.

The bank-customer relationship begins:

when the customer opens a checking account and deposits funds.

GR8 Products, Inc., warrants its goods to be free of defects. If Heck issues an instrument to obtain goods from GR8 that proves defective, Heck can avoid paying on the instrument:

whether it is a check or a note.

All of the following are services typically used by online banking customers except:

withdrawing funds

The Electronic Fund Transfer Act states that you will only be liable for $50 if someone steals your debit card, as long as:

you report the theft within two days of discovering it.