Quiz: Ch 13 - Negotiable Instruments and Credit

In General Electric Business Financial Services v. Silverman, where Silverman failed to repay a loan from GE Financial after his company went bankrupt, despite having signed a guarantee to repay the loan even if the company went bankrupt, the district court: A) granted the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement B) did not grant the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement C) did not grant plaintiff's movement for summary judgment because the Illinois Credit Agreement Act allows affirmative defenses that rely on oral promises that contradict the written terms of the agreement D) dismissed the case for lack of written evidence of an existing contract E) dismissed the case due to improper filing of court documents

A) granted the plaintiff's movement for summary judgment because the Illinois Credit Agreement Act bars affirmative defenses that rely on oral promises that contradict the written terms of the agreement

A mortgagor is: A) the debtor on a mortgage B) the debtor on a contract for purchasing furniture C) the creditor on a mortgage D) the creditor on a deal with a bank E) none of the other choices are correct

A) the debtor on a mortgage

In a suretyship: A) a bank immediately accepts the credit of its debtor In a suretyship: B) the credit of a third party secures a debt C) the credit of the debtor is sufficient to secure a debt D) a bank takes a property interest in the debtor's real estate E) none of these

B) the credit of a third party secures a debt

A(n) ____ is a legally binding written order to pay a fixed sum of money that involves three parties. A) promissory note B) real estate mortgage note C) draft D) easement E) balloon note

C) draft

A guarantor is generally the same as: A) the principal B) the debtor C) the surety D) the grantor E) the testator

C) the surety

A mortgage will typically contain: A) a description of the property B) the amount of debt involved C) the state's duties to the mortgagor D) a description of the property and the amount of debt involved E) a description of the property, the amount of debt, and the state's duties to the mortgagor

D) a description of the property and the amount of debt involved

A creditor who obtains an interest in the property of a debtor without the debtor's express agreement may obtain: A) a fine B) a subrogation C) a misdemeanor D) a dessein E) none of the other choices

E) none of the other choices

The law concerning liens is primarily: A) federal common law B) federal regulatory law C) federal statutory law D) administrative law E) none of the other choices

E) none of the other choices

When a note is to be paid in regular payments but also includes a final payment more than double the regular payments, the note is called: A) an installment note B) a collateral note C) a payee note D) a maker note E) none of the other choices

E) none of the other choices

A(n) ____ is a statutory procedure under which a creditor gains the right to attach up to 25 percent of a customer's net wages to be applied to an outstanding debt. A) easement B) financing lien C) lien D) mortgage E) none of the other choices are correct

E) none of the other choices are correct

Promissory notes are instruments that involve ____ parties. A) three B) four C) more than three D) five E) none of the other choices are correct

E) none of the other choices are correct

The ____ of a note is the party who promises to pay another party. A) marketer B) payee C) financer D) payer E) none of the other choices are correct

E) none of the other choices are correct

When real estate is used as collateral to secure the loan, the note is a: A) balloon note B) fixed note C) property note D) landed note E) none of the other choices are correct

E) none of the other choices are correct

When real estate itself is used to secure a debt obligation it is evidenced by a: A) certificate of real estate B) draft C) lien D) credit report E) none of the other choices are correct

E) none of the other choices are correct

(T or F) A mechanic's lien is also called an artisan's lien.

False

(T or F) A mechanic's lien is the most common lien on personal property.

False

(T or F) A negotiable instrument is a promise by one party to pay a undefined sum of money to another party. There are two parties: the maker and the payee. While the amount to be paid may vary, the date of payment must be set at a specific time in the future.

False

(T or F) A note involves two parties, the maker and the payee. Payment must be on demand.

False

(T or F) According to the Statutes of Fraud, mortgages may be either oral or in writing.

False

(T or F) Negotiable instruments payable "to bearer" are considered the safest form.

False

(T or F) Promises to pay include drafts and checks.

False

(T or F) The only property that is typically exempt from attachment is personal property worth over $1,000.

False

(T or F) To be ordinary holder of a negotiable instrument, the holder must give value for it, take it without knowledge that it is overdue or defective, and must take it in good faith.

False

(T or F) To meet the UCC's requirements for negotiability, an instrument must be payable to a specific party.

False

(T or F) When real estate is used to back up a note, it is called a collateral note.

False

(T or F) When the maker of a note promises to repay the note in specific installments over time, it is a balloon note.

False

(T or F) A cashier's check is a form of check in which the bank is both the drawer and the drawee.

True

(T or F) A check is a draft drawn on a bank and payable on demand.

True

(T or F) A negotiable instrument may be transferred in two basic ways. If the instrument is made "to the order" of the payee, the payee must (1) endorse the instrument and (2) deliver the instrument to a third party. If the instrument is made "to bearer," the party in possession of the instrument is required only to deliver it to transfer it.

True

(T or F) An artisan's (possessory) lien attaches to personal property.

True

(T or F) If a commercial instrument is nonnegotiable, it falls under the common law, not the UCC.

True

(T or F) Orders to pay include drafts and checks.

True

(T or F) Real estate is typically financed by borrowing money and securing the loan with a mortgage.

True

(T or F) The drawee owes money to the drawer in a negotiable instrument.

True

(T or F) The mortgagee is the creditor who makes a mortgage.

True

(T or F) The party to receive a payment from a negotiable instrument is called the payee.

True

(T or F) The party who agrees to make a payment to another party, based on a document presented to it, such as a bank, is called the drawee.

True

(T or F) The party who issues or creates a document that requests payment, probably from a bank, is called the drawer.

True

(T or F) To meet the UCC's requirements for negotiability, an instrument must be in writing.

True

(T or F) To protect the rights of the mortgagee, a mortgage should be recorded with a state official.

True

(T or F) When the payee is concerned about the quality of a draft, it may be submitted to the drawee for confirmation. That is called an acceptance or bankers' acceptance.

True

A promise to pay a certain sum of money to another party is a type of commercial paper called a(n): A) note B) check C) obligation D) promise E) draft

note