Unit 3 Questions

To pay for investment advice from financial consultants Buffet and Carraldo, Doris signs a check payable to "Buffet or Carraldo." A proper indorsement of the check is a. "Buffet" only, or "Carraldo" only, but not "Buffet" and "Carraldo." b. "Buffet" and "Carraldo" only. c. not possible. d. "Buffet" only, or "Carraldo" only, or "Buffet" and "Carraldo."

"Buffet" only, or "Carraldo" only, or "Buffet" and "Carraldo."

Theo signs a check payable to the order of Urban 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 a. $1,000. b. $0. c. $1,100. d. $100.

$1,000.

Jenna receives a check from Kristy. Without Jenna's knowledge, Leland indorses it in his own name and deposits it in his account at Metro Bank. In Jenna's subsequent suit against the bank for the money, the court will most likely rule in favor of a. Metro Bank, because it is a holder in due course. b. Jenna, because Metro Bank is not a holder in due course. c. Metro Bank, because Leland's signature is not authorized. d. Jenna, because Leland's signature is not authorized.

Jenna, because Leland's signature is not authorized.

To finance the purchase of a house from Sander, Tobias signs an instrument promising to pay to "Uno Mortgage Company" $200,000 with interest in installments with the final payment due July 10, 2044. To be negotiable, this instrument must include the signature of a. Tobias. b. Uno's chief financial officer. c. Sander or Sander's realtor. d. a non-party witness.

Tobias.

Avril receives a payroll check from Business Solutions, Inc., and indorses it by signing her name on the back of the check. This is a. a restrictive indorsement. b. a special indorsement. c. a qualified indorsement. d. a blank indorsement.

a blank indorsement.

Dedra signs a check payable to Ember, who indorses the back, gives it to Federal Commerce Bank, and receives cash. The transfer of the check from Ember to the bank is a. a holding. b. a negotiation. c. a sale. d. an assignment.

a negotiation.

Noah transfers an instrument to Olivia in a form and by a means that makes Miguel a "holder." This is a. a holding. b. a sale. c. an assignment. d. a negotiation.

a negotiation.

Emily writes and signs a check payable to "Festival Cinema." Georg, Festival's manager, indorses the check "For deposit only." This is a. a restrictive indorsement. b. a blank indorsement. c. a special indorsement. d. a qualified indorsement.

a restrictive indorsement.

Esteban receives a check from Fleet Trucking Corporation. Esteban indorses the check to Garden Valley Bank by writing "pay to Garden Valley Bank only" and signing his name. This is a. a special indorsement. b. a restrictive indorsement. c. a blank indorsement. d. a qualified indorsement.

a restrictive indorsement.

Nena obtains a check payable to her order from Oran. Nena signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nena's signature. Refer to Fact Pattern 13-A1. When Patricia writes "Pay to Patricia" above Nena's signature, Nena's signature becomes a. a blank indorsement. b. a special indorsement. c. a qualified indorsement. d. a forgery.

a special indorsement.

LNG Corporation and Midstates Utility Company enter a contract for a sale of liquified natural gas. LNG draws a draft unconditionally ordering Midstates Utility to pay $50,000 to LNG's order in sixty days. Midstates Utility signs and dates the draft. Refer to Fact Pattern 12-2A. This instrument is a. a nonnegotiable instrument. b. a banker's acceptance. c. a trade acceptance. d. a promissory note.

a trade acceptance.

Vicenzo, in good faith and for value, gets from Wren a check "payable to the order of bearer." Vicenzo does not know that Wren stole the check. Vicenzo is a. not an HDC, because Wren did not acquire the check in good faith. b. an HDC. c. not an HDC, because Wren did not acquire the check for value. d. not an HDC, because the check is a bearer instrument.

an HDC.

Connie transfers a note by signing it and delivering it to Diana. Diana is a. a drafter. b. an indorser. c. an indorsee. d. a promisor.

an indorsee.

Nena obtains a check payable to her order from Oran. Nena signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nena's signature. Refer to Fact Pattern 13-A1. When Patricia writes "Pay to Patricia" above Nena's signature, the check becomes a. a promissory note. b. a bearer instrument. c. a stolen instrument. d. an order instrument.

an order instrument.

Sean draws a check payable to "Team Tickets, Inc." to buy two season tickets to the next year's State College football games. This instrument is a. void. b. a bearer instrument. c. valid but nonnegotiable. d. an order instrument.

an order instrument.

Erin draws a check payable to "Foodland" to buy groceries. Refer to Fact Pattern 12-1A. Erin's check is most likely a. a promise to pay. b. a certificate of deposit. c. a promissory note. d. an order to pay.

an order to pay.

Sergio makes a gift of a check to Todd who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Todd is a. an ordinary holder in due course. b. an ordinary holder. c. none of the choices. d. an assignee.

an ordinary holder.

To obtain dental supplies for Orthodontics Dental Clinic, Piper executes a draft in favor of Quality Supply Corporation. A draft is a. a restricted promise to deliver goods at a future date. b. a qualified promise to set aside a sum of money. c. a conditional promise to pay money. d. an unconditional written order to pay money.

an unconditional written order to pay money.

Nena obtains a check payable to her order from Oran. Nena signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nena's signature. Refer to Fact Pattern 13-A1. By writing "Pay to Patricia" above Nena's signature, Patricia a. relieves himself from liability on the instrument. b. avoids the risk of loss from theft of the instrument. c. converts a legitimate negotiable instrument into a stolen instrument. d. locks the instrument into the bank collection process.

avoids the risk of loss from theft of the instrument.

Builders Exchange, Inc., issues an instrument in favor of Custom Construction Company. For the instrument to be negotiable, it must a. be payable on demand or at a specific time. b. be signed by the payee. c. be a conditional promise or order to pay. d. recite the consideration given in exchange for it.

be payable on demand or at a specific time.

Gwen signs a check payable to Hart and gives it to him. Hart indorses the back, and transfers the check to Ingrid. To negotiate the check to Jaime, Ingrid must a. write "Ingrid" on the back. b. write "pay to the order of Jaime [signed] Ingrid" on the back. c. deliver the check to Jaime. d. obtain Jaime's signature on the back.

deliver the check to Jaime.

Ryan negotiates an order instrument to Selina by a. delivery with an assignment of its rights under a contract. b. presenting it in response to a demand by Selina. c. delivery alone. d. delivery with any necessary indorsement.

delivery with any necessary indorsement.

Lucas signs an instrument payable to the order of MoneyNow, Inc., that allows a holder to demand payment of the entire amount due, with interest, if Lucas fails to make a payment. This instrument is a. nonnegotiable, because the exact payment date cannot be determined from the face of the instrument. b. nonnegotiable, because a holder can move up the payment date. c. negotiable. d. nonnegotiable, because moving up the payment date is conditional.

negotiable.

Oliver signs an instrument that states it is being executed "as per a contract for the sale of a case of apples dated May 1." This instrument is a. nonnegotiable, because it refers to an express contract. b. negotiable. c. nonnegotiable, because it includes the specific date of a contract. d. nonnegotiable, because banks cannot easily process commodities.

negotiable.

On May 1, Miyu signs a check that is payable to the order of Nicole and that is dated July 1. This check is a. nonnegotiable, because it is payable to a corporation. b. negotiable. c. nonnegotiable, because it is postdated. d. nonnegotiable, because it is signed by the drawer.

negotiable.

Rosario signs an instrument using an "R" with an oval encircling it. With this mark for a signature, the instrument is a. nonnegotiable, because an initial does not state the signer's name. b. nonnegotiable, because this mark is a symbol, not a signature. c. nonnegotiable, because a simple mark implies a lack of serious intent. d. negotiable.

negotiable.

To finance the purchase of an electric guitar and amplifier from Leon's Guitars, Milo signs an instrument promising to pay to "National Lenders" $1,800 with interest in installments with the final payment due August 15, 2014. To be negotiable, this instrument must include on its face a. no conditions. b. any conditions on the sale of the goods. c. any conditions to the repayment of the loan. d. any conditions to the disbursement of the funds.

no conditions.

Farley gets a $300 check as a gift from Gena. Farley crudely increases the amount of the check to $3,000—the alteration is obvious—and transfers it to Home Entertainment store in exchange for a new HD TV. The store deposits the check in its bank account at Intrastate Bank. HDCs of this check include a. none of these parties. b. Farley, Home Entertainment, and Intrastate Bank. c. Farley only. d. Home Entertainment and Intrastate Bank only.

none of these parties.

On behalf of Bottled Drinks Company, Devlin signs an instrument in which he promises to deliver 100 cases of bottled springwater as payment to Containers & Packaging, Inc., on April 1. This instrument is a. nonnegotiable, because it does not indicate a specific brand of water. b. negotiable. c. nonnegotiable, because cases of water is not a medium of exchange authorized or adopted by a government as currency. d. nonnegotiable, because it does not recite any consideration.

nonnegotiable, because cases of water is not a medium of exchange authorized or adopted by a government as currency.

Lara writes on a piece of paper, "I owe you $400," signs it, and gives it to Max. This instrument is a. nonnegotiable, because it does not include an express promise to pay. b. nonnegotiable, because it does not state any conditions to payment. c. nonnegotiable, because it does not recite any consideration. d. negotiable.

nonnegotiable, because it does not include an express promise to pay.

Jacob signs a promissory note payable to Kendyl "with interest" on which he conspicuously notes that it is "nonnegotiable." This instrument is a. negotiable. b. nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument. c. nonnegotiable, because it does not specify a rate of interest. d. nonnegotiable, because it includes the notation "nonnegotiable."

nonnegotiable, because it includes the notation "nonnegotiable."

Camille signs an instrument in favor of Donald that states it is "subject to a certain agreement between Camille and Enzo." This instrument is a. nonnegotiable, because Camille and Enzo are not the same persons. b. negotiable. c. nonnegotiable, because it is made subject to a separate agreement. d. nonnegotiable, because it refers to a separate agreement.

nonnegotiable, because it is made subject to a separate agreement.

Ryan owes $5,000 to State University. In the sand on the side of Treetop Hill, he executes an instrument for that amount that otherwise meets the requirements for negotiability. This instrument is likely a. nonnegotiable, because sand is not sufficiently permanent. b. negotiable. c. nonnegotiable, because an instrument must be on paper. d. nonnegotiable, because the school does not appreciate it.

nonnegotiable, because sand is not sufficiently permanent.

Bence signs a promissory note for $1,500 in favor of Community College. The note is undated but specifies that it is "payable one month after date." This note is a. nonnegotiable, because the maturity date cannot be determined from the face of the instrument. b. nonnegotiable, because there is no option to pay early. c. nonnegotiable, because one month is not a reasonable time. d. negotiable.

nonnegotiable, because the maturity date cannot be determined from the face of the instrument.

Lindsey, an accountant for Madison & Monroe, acquires a negotiable instrument from Norma by promising to pay its face value in thirty days. Lindsey acquires the status of an HDC when she a. acquires possession of the negotiable instrument. b. promises to pay the face value due on the instrument. c. pays the face value due on the instrument. d. transfers the instrument to another party.

pays the face value due on the instrument.

Talia, who is not a Urban Bank customer, attempts to cash a check drawn on the bank. The check is considered dishonored if Urban Bank a. asks Talia to sign a receipt for the payment on the check. b. charges a fee to cash it. c. refuses to pay it. d. asks Talia for reasonable identification.

refuses to pay it.

Nena obtains a check payable to her order from Oran. Nena signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nena's signature. Refer to Fact Pattern 13-A1. After Patricia writes "Pay to Patricia" above Nena's signature, further negotiation of the check a. requires delivery alone. b. requires Patricia's indorsement and delivery. c. is not possible. d. requires Nena's re-indorsement and delivery.

requires Patricia's indorsement and delivery.

LNG Corporation and Midstates Utility Company enter a contract for a sale of liquified natural gas. LNG draws a draft unconditionally ordering Midstates Utility to pay $50,000 to LNG's order in sixty days. Midstates Utility signs and dates the draft. Refer to Fact Pattern 12-2A. On this instrument, LNG is a. the trader. b. the banker. c. the maker. d. the drawer.

the drawer.

Erin draws a check payable to "Foodland" to buy groceries. Refer to Fact Pattern 12-1A. With respect to Erin's check, Foodland is a. the drawee. b. the maker. c. the payee. d. the drawer.

the payee.