Business Law: Exam #1
False
Even if the bank pays a check in spite of a stop-payment order, the bank will not be obligated to re-credit the customer's account.
True
For a check, a "reasonable time" is ninety days after the date of the check
False
Usually, indorsements are qualified indorsements.
True
With respect to negotiability, an order on an instrument may be addressed to one person or to more than one person, either jointly or alternatively
True
A bank may contractually shift to the customer the risk of forged checks created electronically or by the use of nonmanual signatures.
False
A bank may not charge a postdated check against a customer's account unless the customer notifies the bank, in a timely manner, to pay the check before the stated date.
True
A check is a special type of draft that is drawn on a bank, ordering the bank to pay a fixed amount of money on demand.
False
A customer who fails to report a forged signature within thirty days from the date that the bank statement showing the item was made available for inspection loses the legal right to have the bank recredit his or her account.
True
A forged signature on a check has no legal effect as the signature of a drawer.
False
A holder takes an instrument for value by promising to perform or give value in the future.
True
A holder takes an instrument for value if he or she accepts the instrument in payment of a preexisting obligation.
False
A holder takes an instrument for value if he or she inherits an instrument.
False
A person who takes a negotiable instrument from a thief cannot become an HDC even if he or she acted honestly in the process of acquiring the instrument
True
A restrictive indorsement does not destroy negotiability.
True
A sight draft may be payable on acceptance
False
A signature on a negotiable instrument cannot be made by a device, such a a rubber stamp or a thumbprint
True
A stop-payment order is an order by a customer to his or her bank not to pay a certain check.
True
A symbol can serve as a valid signature
False
A transfer by assignment can make it possible for a transferee to receive more rights in the instrument than the prior possessor had
False
All checks are time instruments.
True
An indorsement is a signature, with or without additional words or statements
False
An indorsement should be identical to the name of the indorsee, regardless of how the name appears on the instrument.
False
An instrument is non-negotiable unless the word "negotiable" is printed on it
False
An instrument payable to two or more persons in the alternative requires the indorsement of both payees for negotiation.
False
An instrument that promises to pay "in goods" can be negotiable.
False
Banks must pay interest based on the full balance of a customer's interest-bearing account on the day the bank posts the interest.
True
Checks are usually three party instruments
True
If a bank pays a check in spite of a stop-payment order, the bank is liable only for amount of the actual loss suffered by the drawer because of the wrongful payment.
False
If a bank wrongfully dishonors a cashier's check, a holder can recover only the amount of the check.
True
In every situation involving a forged drawer's signature or an alteration, a bank must observe reasonable commercial standards of care in paying on a customer's check.
False
Negotiating order instruments requires either delivery or indorsement but not both.
True
Often, whether a holder will be able to obtain payment on an instrument will depend on whether he or she is a holder in due course
False
On a cashier's check, the drawer is also always the payee.
True
On a certificate of deposit, the bank is the maker and the depositor is the payee.
False
The bank is liable to the payee or the holder of check in a civil suit if a check is dishonored for insufficient funds.
True
The checks that you wrote are negotiable instruments that act as substitutes for cash.
True
To avoid the risk of loss from theft, a holder may convert a blank indorsement to a special indorsement.
False
To be negotiable, an instrument cannot be portable.
True
To be negotiable, an instrument must be in writing.
True
To be negotiable, an instrument must be payable in money
True
When a customer makes a deposit, the customer becomes a creditor, and the bank a debtor, for the amount deposited.
False
When receiving a stale check for payment, a bank has no option but to pay the check.
False
With respect to negotiability, a mere reference to another writing or record makes a promise conditional
False
With respect to negotiability, the location of a signature on a document is important
