MHR 461: Ch. 13 PART 1
T/F: A mechanic's lien is also called an artisan's lien.
False
T/F: A mechanic's lien is the most common lien on personal property.
False
T/F: A negotiable instrument is a promise by one party to pay a undefined sum of money to another party. There are two parties: the maker and the payee. While the amount to be paid may vary, the date of payment must be set at a specific time in the future.
False
T/F: A note involves two parties, the maker and the payee. Payment must be on demand.
False
T/F: A surety agreement must always be in writing to be effective.
False
T/F: According to the Statutes of Fraud, mortgages may be either oral or in writing.
False
T/F: Negotiable instruments payable "to bearer" are considered the safest form.
False
T/F: Promises to pay include drafts and checks.
False
T/F: The only property that is typically exempt from attachment is personal property worth over $1,000.
False
T/F: To be ordinary holder of a negotiable instrument, the holder must give value for it, take it without knowledge that it is overdue or defective, and must take it in good faith.
False
T/F: To meet the UCC's requirements for negotiability, an instrument must be payable to a specific party.
False
T/F: When real estate is used to back up a note, it is called a collateral note.
False
T/F; When the maker of a note promises to repay the note in specific installments over time, it is a balloon note.
False
T/F: A cashier's check is a form of check in which the bank is both the drawer and the drawee.
True
T/F: A check is a draft drawn on a bank and payable on demand.
True
T/F: A conditional guarantor of collection differs from an absolute surety in that the surety is bound with the principal debtor as a primary obligor.
True
T/F: A creditor will have to exhaust all the possible legal procedures to try to collect from the principal debtor before he can collect from a conditional guarantor of collection.
True
T/F: A negotiable instrument may be transferred in two basic ways. If the instrument is made "to the order" of the payee, the payee must (1) endorse the instrument and (2) deliver the instrument to a third party. If the instrument is made "to bearer," the party in possession of the instrument is required only to deliver it to transfer it.
True
T/F: An artisan's (possessory) lien attaches to personal property.
True
T/F: If a commercial instrument is nonnegotiable, it falls under the common law, not the UCC.
True
T/F: If a principal debtor defaults on a loan, an absolute surety will have to pay upon demand of the creditor.
True
T/F: In a suretyship, the creditor's rights against the principal debtor are determined primarily by the contract between them.
True
T/F: Laura is considering the possibility of becoming a surety to Carl on a debt by David, but she would like more information on the relationship between Carl and David concerning the transaction. If Laura requests such information from Carl, he must disclose it, because his failure to disclose material facts will constitute fraud.
True
T/F: Orders to pay include drafts and checks.
True
T/F: Real estate is typically financed by borrowing money and securing the loan with a mortgage.
True
T/F: Rodrigo lends money to Isaac on Linda's promise to act as a surety. Rodrigo's extension of credit is the consideration to support Isaac's promise to repay the loan and Linda's suretyship undertaking.
True
T/F: Sureties have a right of exoneration against their cosureties.
True
T/F: The drawee owes money to the drawer in a negotiable instrument.
True
T/F: The mortgagee is the creditor who makes a mortgage.
True
T/F: The party to receive a payment from a negotiable instrument is called the payee.
True
T/F: The party who agrees to make a payment to another party, based on a document presented to it, such as a bank, is called the drawee.
True
T/F: The party who issues or creates a document that requests payment, probably from a bank, is called the drawer.
True
T/F: To meet the UCC's requirements for negotiability, an instrument must be in writing.
True
T/F: To protect the rights of the mortgagee, a mortgage should be recorded with a state official.
True
T/F: When the payee is concerned about the quality of a draft, it may be submitted to the drawee for confirmation. That is called an acceptance or bankers' acceptance.
True
A mortgagor is: a. the debtor on a mortgage b. the debtor on a contract for purchasing furniture c. the creditor on a mortgage d. the creditor on a deal with a bank e. none of the other choices are correct
a.
A promise to pay a certain sum of money to another party is a type of commercial paper called a(n): a. note b. check c. obligation d. promise e. draft
a.
Alice loans George $500 and Sue acts as surety under the loan agreement. When George defaults, Alice comes to Sue to collect the $500. Sue reaches a settlement to pay $400 to Alice in complete satisfaction of the loan. What recourse does Sue have against George? a. She can require reimbursement of $400. b. She can require payment of $500. c. She can require payment of $100. d. She cannot require him to pay her, since she accepted the risk of liability.
a.
In General Electric Business Financial Services v. Silverman, where Silverman failed to repay a loan from GE Financial after his company went bankrupt, despite having signed a guarantee to repay the loan even if the company went bankrupt, the district court: a. granted the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement b. did not grant the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement c. did not grant plaintiff's movement for summary judgment because the Illinois Credit Agreement Act allows affirmative defenses that rely on oral promises that contradict the written terms of the agreement d. dismissed the case for lack of written evidence of an existing contract e. dismissed the case due to improper filing of court documents
a.
An undertaking by a surety to protect an employer against the dishonesty of an employee is a(n) ____ bond. a. performance b. fidelity c. judicial d. official
b.
In a suretyship: a. a bank immediately accepts the credit of its debtor b. the credit of a third party secures a debt c. the credit of the debtor is sufficient to secure a debt d. a bank takes a property interest in the debtor's real estate e. none of these
b.
Upon the surety's payment of the principal debtor's entire obligation, the surety obtains all of the rights the creditor has against or through the principal debtor. The term for the surety's "stepping into the shoes" of the creditor is known as: a. contribution. b. subrogation. c. reimbursement. d. exoneration.
b.
A defense that can only be asserted by the principal debtor is called a ____ defense. a. real b. subrogated c. personal d. joint
c.
A guarantor is generally the same as: a. the principal b. the debtor c. the surety d. the grantor e. the testator
c.
A(n) ____ is a legally binding written order to pay a fixed sum of money that involves three parties. a. promissory note b. real estate mortgage note c. draft d. easement e. balloon note
c.
Which of the following would not help a surety defend himself from payment of a debt? a. There was no consideration for the surety agreement. b. There was a modification of the underlying contract. c. The creditor knew the loan was risky and did not dissolve it. d. There was fraud in the execution of the surety agreement.
c.
A mortgage will typically contain: a. a description of the property b. the amount of debt involved c. the state's duties to the mortgagor d. a description of the property and the amount of debt involved e. a description of the property, the amount of debt, and the state's duties to the mortgagor
d.
Because of the ____, the contractual promise of a surety to the creditor must be in writing to be enforceable. a. main purpose doctrine b. Uniform Commercial Code c. Bankruptcy Act d. statute of frauds
d.
Dale defaults on a car loan secured by his car and guaranteed by both Sam and Dave. Subrogation would allow Sam, who paid Dale's full obligation, to: a. repossess the car. b. collect from Dave. c. collect from Dale. d. All of these.
d.
If the principal debtor defaults, the surety has rights against the principal debtor, third parties, and cosureties. These rights would include: a. exoneration. b. reimbursement. c. subrogation. d. All of these.
d.
A creditor who obtains an interest in the property of a debtor without the debtor's express agreement may obtain: a. a fine b. a subrogation c. a misdemeanor d. a dessein e. none of the other choices
e.
A(n) ____ is a statutory procedure under which a creditor gains the right to attach up to 25 percent of a customer's net wages to be applied to an outstanding debt. a. easement b. financing lien c. lien d. mortgage e. none of the other choices are correct
e.
Promissory notes are instruments that involve ____ parties. a. three b. four c. more than three d. five e. none of the other choices are correct
e.
The ____ of a note is the party who promises to pay another party. a. marketer b. payee c. financer d. payer e. none of the other choices are correct
e.
The law concerning liens is primarily: a. federal common law b. federal regulatory law c. federal statutory law d. administrative law e. none of the other choices
e.
When a note is to be paid in regular payments but also includes a final payment more than double the regular payments, the note is called: a. an installment note b. a collateral note c. a payee note d. a maker note e. none of the other choices
e.
When real estate is used as collateral to secure the loan, the note is a: a. balloon note b. fixed note c. property note d. landed note e. none of the other choices are correct
e.
When real estate itself is used to secure a debt obligation it is evidenced by a: a. certificate of real estate b. draft c. lien d. credit report e. none of the other choices are correct
e.
