Chapter 24-25 B-Law
An instrument is nonnegotiable if: a. it is payable upon an event uncertain as to time of occurrence. b. it is postdated. c. the obligor may extend the maturity of the instrument for a definite period of time. d. all of the above.
A
CPA: A bank issues a negotiable instrument that acknowledges receipt of $40,000. The instrument also provides that the bank will repay the $40,000 plus 6% interest per annum to the bearer 90 days from the date of the instrument. The instrument is a: a. certificate of deposit. b. time draft. c. trade or banker's acceptance. d. cashier's check.
A
CPA: On February 15, Mazur Corp. contracted to sell 1,000 bushels of wheat to Good Bread, Inc. at $6.00 per bushel, with delivery to be made on June 23. On June 1, Good advised Mazur that it would not accept or pay for the wheat. On June 2, Mazur sold the wheat to another customer at the market price of $5.00 per bushel. Mazur had advised Good that it intended to resell the wheat. Which of the following statements is true? a. Mazur can successfully sue Good for the difference between the resale price and the contract price. b. Mazur can resell the wheat only after June 23. c. Good can retract its anticipatory breach at any time before June 23. d. Good can successfully sue Mazur for specific performance.
A
Susan Seller has shipped 100 widgets to Bob Buyer pursuant to a contract. The next day Susan discovers that Bob is insolvent. On learning this: a. Susan may stop delivery. b. Susan must cancel the contract. c. Susan has no recourse available under the Code. d. Susan may cover and sue for damages.
A
Which of the following is negotiable and subject to Article 3 of the UCC? a. A check that states "Pay to Jose Martinez." b. A draft that states "Pay to Jose Martinez." c. A draft that states "I wish you would pay Jose Martinez." d. A note that states, "Due Jose Martinez $200."
A
Which of the following is not a correct statement concerning an unpaid seller's attempt to reclaim goods from an insolvent buyer? a. The seller must demand that the goods be returned within twenty days after the buyer has received them unless the buyer has fraudulently misrepresented his solvency to the seller. b. The seller, if successful in reclaiming the goods from an insolvent buyer, may not seek other remedies with respect to the goods. c. The seller's right to reclaim the goods is subject to the rights of a buyer in the ordinary course of business or other good faith purchaser. d. All of the above
A
With respect to negotiation, which of the following is true? a. The transferee becomes a holder. b. An impostor may never transfer a negotiable instrument. c. The transferor has no liability with respect to the transferred instrument. d. None of the above are true.
A
A certificate of deposit is a written acknowledgment by a bank of the receipt of money wherein the bank promises which of the following? To repay: a. at a stated future date. b. with a stated rate of interest. c. both of the above. d. none of the above.
B
An instrument is nonnegotiable if it: a. refers to the existence of a separate agreement. b. states that it is subject to the terms of a separate agreement. c. is attached to a separate agreement. d. is made payable to the order of an office rather than a specified individual.
B
Bearer paper may be converted into order paper by: a. a blank indorsement. b. a special indorsement. c. a restrictive indorsement. d. a qualified indorsement.
B
CPA: Under the UCC Sales Article, a plaintiff who proves fraud in the formation of a contract may: a. elect to rescind the contract and need not return the consideration received from the other party. b. be entitled to rescind the contract and sue for damages resulting from the fraud. c. be entitled to punitive damages provided physical injuries resulted from the fraud. d. rescind the contract even if there was no reliance on the fraudulent statement.
B
Christina Customer deposits $5,000 at First Bank and gets a certificate of deposit from the bank. a. Christina is the maker of the certificate. b. First Bank is the maker of the certificate. c. Christina is the drawer of the certificate. d. First Bank is the drawer of the certificate.
B
Of the following remedies, which is not available to the buyer? a. To sue for replevin b. To resell the goods c. To cover d. To cancel the contract
B
The Code permits the seller to bring an action to recover the price in all of the following cases except: a. where the buyer has accepted the goods but has failed to make a payment. b. where the goods have been identified to the contract and a ready market is available for their resale at a reasonable price. c. where conforming goods have been lost or damaged after risk of loss has passed to the buyer. d. all of the above
B
The Code provision which holds that a transferee acquires the rights of a holder in due course if the transferor has such right is known as: a. an allonge. b. the shelter rule. c. the impostor rule. d. none of the above.
B
Under the Code, the equity meaning of insolvency is: a. that a person has no assets. b. that a person is unable to pay debts as they become due. c. that a person's total liabilities exceed the value of all her assets. d. none of the above.
B
Which of the following is needed to be a holder of a bearer instrument? a. A transfer for value b. Possession of the instrument c. The indorsement of the transferor d. An allonge
B
Which of the following is not a seller's remedy? a. Withhold delivery b. Cover c. Resell the goods d. Cancel the contract
B
Which of the following statements, written on the back of a check, is an example of an effective restrictive indorsement? a. "Pay A only." b. "Pay any bank." c. "Pay A, without recourse." d. All of the above.
B
A check drawn by a bank upon itself to the order of a named payee is a: a. promissory note. b. certificate of deposit. c. cashier's check. d. none of the above.
C
A negotiation conforming to Code requirements is effective to transfer the instrument even if it is: a. made by a person without capacity. b. made as part of an illegal transaction. c. both of the above. d. neither of the above.
C
An indorsement is ineffective as a negotiation if it: a. is not dated. b. conveys only the unpaid balance on the instrument. c. is forged. d. (b) and (c) but not (a).
C
An indorsement which reads "Pay only if the goods are delivered by December 1, without recourse, Jane Jones" is: a. blank, nonrestrictive, qualified. b. blank, restrictive, unqualified. c. blank, restrictive, qualified. d. special, restrictive, unqualified.
C
An instrument is nonnegotiable if it: a. contains a promise or order to pay 800 French francs. b. provides that the payee, by cashing it, acknowledges full satisfaction of an obligation of the drawer. c. contains a promise to deliver goods. d. is payable on or before a specified date.
C
An instrument is nonnegotiable if it: a. relies upon the general credit of the drawer or maker. b. directs that a particular account be debited after payment. c. has no name but contains an accidental thumbprint of the maker. d. states that it is given in consideration for the purchase of a blue suit.
C
Brian Buyer contracted to buy 1000 widgets from Sal Seller for $5,000. Sal shipped defective widgets, but Brian accepted them and properly notified Sal of the breach. As warranted, the widgets were valued at $7,000, but as received they were worth $4,000. If Brian is successful in his suit for breach of warranty against Sal, he will be allowed to recover: a. $1,000. b. $2,000. c. $3,000. d. $7,000.
C
If the seller repudiates the contract, the buyer is entitled to recover damages from the seller in an amount equal to the difference between the contract price and the market price of goods when: a. the parties entered into the contract. b. the breach occurred. c. the buyer learned of the breach. d. none of the above.
C
Indorsement by the appropriate parties is necessary to: a. transfer an instrument by assignment. b. negotiate a bearer instrument. c. negotiate an order instrument. d. (a) and (c), but not (b).
C
Spence Seller in Seattle agrees to sell goods to Beth Buyer in Buffalo for $20,000 F.O.B. Buffalo, delivery on June 15. Beth wrongfully rejects the goods. The market price of the goods on June 15 in Buffalo is $15,000. Spence incurred $1,000 in incidental expenses while saving $500 in expenses. How much would Spence be allowed to recover from Beth? a. $20,000 b. $15,000 c. $5,500 d. $5,000
C
The legal concept of negotiability makes written instruments: a. acceptable as a substitute for money. b. acceptable as a credit device. c. both (a) and (b). d. none of the above.
C
Which of the following is not a money-oriented remedy? a. Cover and obtain damages b. An action to recover market price damages c. Cancellation d. An action to recover damages for nonconformity
C
A seller's right to stop delivery ceases when: a. the buyer receives the goods. b. the bailee of goods notifies the buyer that he holds them for the buyer.. c. a negotiable document of title is negotiated to the buyer. d. any of the above.
D
A signature on an instrument may: a. appear in the upper right-hand corner. b. be a thumbprint. c. be an assumed name. d. be all of the above.
D
An instrument is nonnegotiable if: a. it is payable at a stated rate of interest which will increase by 2% upon default. b. it provides for the recovery of costs and attorney's fees upon default. c. it is payable with a fixed addition if paid after maturity. d. none of the above.
D
CPA: Assuming each of the following is negotiable, which qualifies as a draft under the UCC Negotiable Instruments Article? a. A warehouse receipt b. A demand promissory note c. A document of title d. A cashier's check.
D
CPA: Hand executed and delivered to Rex a $1,000 negotiable note payable to Rex or bearer. Rex then transferred it to Ford after indorsing it on the back by merely signing his name. Which of the following is a correct statement? a. Rex's indorsement was a special indorsement. b. Rex's indorsement was necessary to Ford's qualification as a holder. c. The instrument initially being bearer paper cannot be converted to order paper. d. The instrument is bearer paper, but Ford can convert it to order paper by writing "pay to the order of Ford" above Rex's signature.
D
CPA: The following indorsements appear on the back of a negotiable promissory note made payable "to bearer." Clark has possession of the note. Pay to Sam North Alice Fox Sam North (Without recourse) Which of the following statements is correct? a. Clark's unqualified indorsement is required to further negotiate the note. b. To negotiate the note, Clark must have given value for it. c. Clark is not a holder because North's qualified indorsement makes the note nonnegotiable. d. Clark can negotiate the note by delivery alone.
D
First Bank is the holder of a note which states that it is secured by a mortgage. a. The note is nonnegotiable, because it refers to another agreement. b. The note is nonnegotiable, because it is subject to another agreement. c. The note is nonnegotiable, because it violates the particular fund doctrine. d. The note is negotiable.
D
First Bank issued a certificate of deposit to Howard Homeowner. At Howard's request, the instrument was made payable to bearer. a. A thief could never redeem the certificate. b. The instrument needs a blank indorsement to be redeemed. c. If Howard places a special, unqualified indorsement on the instrument, he will avoid making a guarantee of its payment. d. None of the above.
D
If H, the holder of a note, indorses it, "Pay A, but only if P is elected president in November," the indorsement is: a. blank, restrictive, qualified. b. special, nonrestrictive, qualified. c. blank, nonrestrictive, unqualified. d. special, restrictive, unqualified.
D
If an aggrieved party rightfully cancels a contract: a. he discharges any obligation of future performance that he might have under the contract. b. he retains any remedy for breach of the whole contract or of any unperformed balance. c. neither (a) nor (b) d. both (a) and (b)
D
Negotiability is destroyed if an instrument is indorsed with the words: a. "pay to A only." b. "pay to the order of A." c. "pay to A or his order." d. none of the above.
D
Robyn indorsed her paycheck with her signature and the words "for deposit only." This indorsement is a: a. blank indorsement. b. special indorsement. c. restrictive indorsement. d. blank, restrictive indorsement.
D
Where a seller fails to make delivery, or repudiates, the buyer may: a. cover and recover damages. b. recover payments made. c. recover market price damages. d. all of the above.
D
Which of the following are negotiable instruments? a. A draft b. A check c. A promissory note d. All of the above
D.
An indorsement written on a piece of paper clipped to the instrument is not valid.
F
A check which is "payable to cash" requires an appropriate indorsement for further negotiation.
False
A draft involves only two parties, the drawer and the drawee.
False
A nonnegotiable instrument is not transferable.
False
A note is a written promise by a maker to pay a payee and is thus a two-party instrument.
False
A note must be signed by the drawer, while a draft must be signed by the maker.
False
A person can be a holder only if the instrument has been transferred to that person by negotiation.
False
A qualified indorsement destroys the instrument's negotiability.
False
An allonge may be used only if the instrument does not contain sufficient space for an indorsement.
False
An indorser who has indorsed a negotiable instrument with a qualified indorsement stating that it is "without recourse" has no liability of any kind to subsequent holders.
False
An instrument is negotiable even though it is incomplete as to the amount payable.
False
An instrument is nonnegotiable if the holder may extend the maturity of the instrument for an indefinite period of time.
False
An instrument is nonnegotiable if the obligor may extend the maturity of the instrument for a definite period of time.
False
Assignment is the transfer of a negotiable instrument in such a manner that the transferee becomes a holder.
False
Greater rights are given to the transferee under assignment than under negotiation.
False
In resolving ambiguities, printed words control typewritten and handwritten words, and typewritten words control handwritten words.
False
Negotiation of a bearer instrument requires a valid indorsement.
False
The concept of holder in due course was developed to make transferees subject to defenses.
False
Under Revised Article 3, an order to pay only out of a particular fund makes the instrument conditional and thus destroys negotiability.
False
A blank indorsement can be converted into a special indorsement.
True
A cashier's check is a check drawn by a bank on itself to the order of a named payee.
True
A restrictive indorsement attempts to limit the rights of the indorsee.
True
A thief or finder of order paper which has been indorsed in blank can transfer good title to a subsequent holder who may qualify as a holder in due course.
True
An instrument payable with a stated, variable rate of interest is an obligation for a fixed amount.
True
An instrument, otherwise negotiable, is negotiable bearer paper if by its terms it is payable to "cash."
True
Negotiability is a legal concept that makes written instruments an accepted form of payment in substitution for money.
True
Requirements for negotiation depend on whether the instrument is bearer paper or order paper.
True
The indorsement of an impostor or of any other person in the name of the named payee is effective if the impostor has induced the maker or drawer to issue the instrument to him.
True
The transfer of a nonnegotiable promise or order operates as an assignment.
True
The treasurer of Image, Inc. uses a stamp to sign checks drawn on the corporate account. This meets the signature requirement of negotiability.
True
