BLAW Chapter 16 Quiz

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. a knowledgeable holder in due course. b. an ordinary holder. c. an ordinary holder in due course. d. an ordinary note taker

An ordinary holder

Fact Pattern 16-1 Nina obtains a check payable to her order from Oran. Nina signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nina's signature. Refer to Fact Pattern 16-1. By writing "Pay to Patricia" above Nina's signature, Patricia

Avoids the risk of loss from theft of the instrument

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 blank indorsement

Fact Pattern 16-1 Nina obtains a check payable to her order from Oran. Nina signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nina's signature. Refer to Fact Pattern 16-1. When Patricia writes "Pay to Patricia" above Nina's signature, the check becomes

An order instrument

At 1 a.m., on the sidewalk in front of EZ Credit Corporation, which is closed, Frank buys a $500 promissory note for $50 from Greg. When presented with Frank's demand for payment, Diane, the maker of the note, could successfully claim that Frank

Did not require the instrument in good faith

A special indorsement does not specify a particular indorsee. (T/F)

False

A restrictive indorsement does not destroy negotiability. (T/F)

True

An indorsement is a signature, with or without additional words or statements. (T/F)

True

Any irregularity on the face of an instrument that calls into question its validity will bar HDC status. (T/F)

True

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

deliver the check to Luis.