Chapter 16
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 blank indorsement. b. a qualified indorsement. c. a restrictive indorsement. d. a special indorsement.
a. a blank indorsement.
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 a. an ordinary holder. b. a knowledgeable holder in due course. c. an ordinary note taker. d. an ordinary holder in due course.
a. an ordinary holder.
Beth acquires a negotiable instrument from Ellen by promising to pay its face value as soon as her income tax refund comes in. Beth acquires the status of an HDC when she a. agrees with Ellen to buy the negotiable instrument. b. pays the face value due on the instrument. c. transfers the instrument to Joseph for value and in good faith. d. meets Ellen at the bank to discuss the deal in person.
b. pays the face value due on the instrument.
Allie signs a check payable to Bess, who indorses the back, gives it to County Credit Union (CCU), and receives cash. The transfer of the check from Bess to CCU is a. an assignment. b. a negotiation. c. a sale. d. none of the choices.
b. a negotiation.
On the back of a check payable to Nero, he writes "Pay to Odell, without recourse" and signs it. This a. renders the check nonnegotiable. b. does not affect the check's negotiability or any party's liability. c. relieves Nero of liability on the check. d. relieves Odell of liability on the check.
c. relieves Nero of liability on the check.
Estes receives a check from Fleet Trucking Corporation. On the back of the check, Estes writes "pay to Garden Valley Bank only" and signs his name. This is a. a special indorsement. b. a blank indorsement. c. a restrictive indorsement. d. a qualified indorsement.
c. a restrictive indorsement.
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. not an HDC, because Wren did not acquire the check for value. c. an HDC. d. not an HDC, because the check is a bearer instrument.
c. an HDC.
Idina wants to buy a promissory note from Jo. The note is due on April 1. To become an HDC, Idina must buy the note a. before noon on April 1. b. within thirty days of April 1. c. before midnight on April 1. d. before 8:00 a.m. on April 1
c. before midnight on April 1.
Rod negotiates a bearer instrument to Shauna by a. delivery with any necessary indorsement. b. presenting it in response to a demand by Shauna. c. delivery alone. d. delivery with an assignment of its rights under a contract.
c. delivery alone.
Edna is the payee of a bearer instrument—a promissory note in the amount of $10,000. Flem offers to irrigate Edna's ranch next week in exchange for the note. She agrees and delivers the note to Flem. Flem is a. an HDC, because he promised to perform services at a future date. b. an HDC, because the transferor was the original payee on the note. c. not an HDC, because he did not yet give value for the instrument. d. not an HDC, because he did not acquire the instrument in good faith.
c. not an HDC, because he did not yet give value for the instrument.
