Chapter 22 Negotiable Instruments Business Law

Who is the drawee of the check? A. The drawer of the check is also its drawee B. The financial institute where the drawer has an account C. The party to whom a check is written D. The financee to whom the check is drawn

B. The financial institute where the drawer has an account

Which one of the following would be a three-paty transaction? A. a promissory note B. a draft C. an ordinary lease D. a certificate of deposit

B. a draft

Who is the drawee in a draft transaction? A. The party that demands the draft B. The party who receives the money from a draft C. The party who writes an order for a draft D. The party who pays the money stated in a draft

D. The party who pays the money stated in a draft

Which of the following statements is true for a negotiable instrument? A. It should not require any undertaking other than the payment of money B. It need not state a fixed amount of money C. It should be signed by the payee. D. It can be either written or oral

A. it should not require any undertaking other than the payment of money

If a promissory note is secured by a piece of real estate, then the note is called a(n) _____ A.mortgage not B. collateral note C. demand note d. installment note

A. mortgage notes

Who is the acceptor of a draft in a draft transaction? A. the drawee B. the financee C. the payee D. the drawer

A. the drawee

A(n) ____ is a type of instrument that is payable to anyone in physical possession of the instrument and presents it for payment when it is due. A. certificate of deposit B. order instrument C. check D. bearer instrument

D. bearer instrument

Which of the following must a promissory note contain to make it negotiable? A. an implied promise to pay B. an uncditional affirmative to pay C. an acknowledgement of debt D. a promise to negotiate

B. an unconditional affirmative to pay

A clasue in an instrument that alows the date of maturity of the instrument to be prolonged to sometime in the future is referred to as the ____ A. forestallement clause B. extension clause C. prepayment clause D. acceleration clause

B. extension clause

Roger, a certified laywer, borrowed money from Jax to start a business. He gave a promissory note to Jax promising to pay the money back anytime within the next five years. But in order to accept the note Jax demanded a securit deposit. Roger gave the gold that he owned as security. Roger was unable to complete payment. He made a new promissory note promising to finish payment within the next year, and promisde to proved free legal service to Jax for the next two years. Which of the following is true for the validity of the new promissory note made by Roger? A. It is a nonnegotiable instrument B. It must contain a specific date or time to be considered valid C. It must contain interest on the old priniciple to become a valid instrument D. It is a negotiable intrument if Jax accepts it

A. It is a nonnegotiable instrument

Which of hte following is considered as a distinction of a check? A. It is a two-party instrument B. It is created when credit is extended to a buyer by a seller. C. It always draws its money from a financial institute D. It is an unconditional written promise to pay

C. It always draw its money from a financial institute

Which of the following is true about a certificate of deposit? A. It is a three-party instrument B. It is used to extend credit to a buyer C. It is a promise to pay D. It can be made to pay on demand

C. It is promise to pay

Who is the payee of a check? A. The drawer of the check is also its drawee B. The financial institute where the drawer has an account C. The party to whom a check is written D. The financee to whom the check is drawn

C. The party to whom a check is written

Which of the following is true about a trade acceptance? A. The buyer is the payee B. The draft is countersigned by the drawee's bank C. The seller is both the drawer and payee D. The draft is only as good as the drawer's creditworthiness

C. The seller is both the drawer and payee

The ___ requirement of negotiable intruments says that negotiable intruments must be able to be easil transported between areas. A. signature B. permanence C. portability D. transparency

C. portability