Acct 416 Exam 3

A blank indorsement

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 qualified indorsement. b. ​a blank indorsement. c. ​a restrictive indorsement. d. ​a special indorsement

Primary

Duke signs a note "payable to the order of Equity Bank." Unless Duke has a valid defense against payment, his liability on this note is​ a. ​qualified. b. ​impaired. c. ​primary. d. ​secondary.

Indorser

Berton transfers a draft by signing it and delivering it to Cormac. Berton is... a. ​a promisor. b. ​an indorsee. c. ​an indorser. d. ​a drafter.

Cici and Doug only

Cici signs a check "pay to the order of Doug" drawn on Cici's account in East Bank. Cici shows the check to Frieda, who agrees that the signature is Cici's and that Doug is owed the amount the check represents. Doug signs the back of the check. Liability on this check extends to​ a. ​Frieda only. b. ​Cici and Doug only. c. ​Cici and Frieda only. d. ​Cici, Doug, and East Bank.

until the proper indorsement is obtained

Community Bank receives a check drawn by Dennis. The check lacks a proper indorsement. Payment can be postponed without dishonor​ a. ​indefinitely. b. ​until the proper indorsement is obtained. c. ​for thirty days. d. ​under no circumstances.

Finance Bank will have to recredit Daisy's account

Daisy signs a check "pay to the order of Ewan" drawn on Daisy's account in Finance Bank. Graham forges Ewan's indorsement. Finance Bank pays the check. Most likely​ a. ​Daisy will be liable for the amount. b. ​the Federal Reserve will reimburse all parties for their costs. c. ​Finance Bank will have to recredit Daisy's account. d. ​Ewan will have to pay Daisy for the amount.

Darby

Darby writes a check to Education Loan Management, Inc., that is drawn on Darby's account at Federal Bank. If the bank does not accept the check, liability for its amount is on​ a. Darby.​ b. ​Federal Bank. c. ​no one. d. ​Education Loan Management.

Dental Clinic

Dental Clinic agent Emma is authorized to write checks on the clinic's account in Finance Bank. Pharma Corporation is a clinic supplier. Emma writes a check on the clinic's account "pay to the order of Pharma [signed] Emma," indorses it in Pharma's name, and deposits it in her own account at Third Bank. If the bank collects payment, the ultimate party most likely to suffer the loss is a. no one. b. Dental Clinic. c. Finance Bank. d. Pharma.

Maker

Dulcey agrees to cosign a promissory note for Excavation Equipment Inc. to buy a backhoe. The note is payable to Premier Bank. Dulcey is an accommodation a. ​drawee. b. ​drawer. c. ​maker. d. ​indorser.

Garden Fields Bank

Ervin signs a check "pay to the order of Felicia" drawn on Ervin's account in Garden Fields Bank. Based on a valid legal ground, Ervin later orders the bank not to pay the check, but the bank pays it over Ervin's order. Subsequent checks written on Ervin's account "bounce." Most likely liable for the costs to Ervin is a. Felicia. b. any party to whom a subsequent check was written. c. Garden Fields Bank. d. Ervin.

Restrictive Indorsement

Estes receives a check form Fleet Trucking Coporation. On the back of the check, Estes writes "pay to Garden Valley Bank only" and signes his name. This is... a. ​a restrictive indorsement. b. ​a blank indorsement. c. ​a qualified indorsement. d. ​a special indorsement.

Tuesday

Falls River Bank receives a check drawn on the account of Get-Rich Industries, Inc., one of the bank's customers, at 3 P.M. Friday. Hildy, the presenter of the check, is not one of the bank's customers. The bank uses deferred posting with a 2 P.M. cutoff hour. If it decides to dishonor the check, it must do so by midnight a. Saturday. b. Sunday. c. Monday. d. Tuesday.

the bank will have to recredit Greta's account

Faye forges Greta's signature on a check "payable to the order of Faye" drawn on Greta's account in Hearthside Bank. Most likely, if the bank pays the check​ a. ​the loss will be apportioned among all of the bank's customers. b. ​the bank will have to recredit Greta's account. c. ​the Federal Reserve will reimburse all parties for their costs. d. ​Greta will be liable for the amount.

fourteen days

Gillis writes a check to Harley as payment for a game player but soon discovers it is broken. He goes to the drawee bank and orally authorizes Ilene, a bank officer, to stop payment on the check. This order is valid for​ a. ​six days. b. ​six months. c. ​any stated period of time. d. fourteen days.​

Deliver the check to Jamie

Gwen signs a check payable to Hart and gives it to him. Hart indorses the back, and transfers the check to Ingrid. To negotiate the check to Jamie, Ingrid must... a. ​obtain Jaime's signature on the back. b. ​write "pay to the order of Jaime [signed] Ingrid" on the back. c. ​write "Ingrid" on the back. d. ​deliver the check to Jaime.

has a personal defense against it

Home Products, Inc., warrants its goods to be free of defects. Ian issues an instrument to obtain a thermos from Home Products that leaks. With respect to payment on the instrument, Ian​ a. ​is liable only to a subsequent holder of the instrument. b. ​has a personal defense against it. c. ​has a universal defense against it. d. ​cannot avoid it.

immediate

Len signs a note "payable to the order of Account Collection Agency." Unless Len has a valid defense against payment, his liability on this note is​ a. ​postponed until the note is dishonored by the payee. b. ​imposed only after payment is demanded. c. ​suspended until payment is due. d. ​immediate.

if O'Leary timely notifies Niklas

Lisa writes a check on her account at Metro Bank to Niklas to pay a debt. Niklas negotiates the check by indorsement to O'Leary, who presents it for payment to Prime Bank. If Prime Bank dishonors the check, O'Leary can obtain payment from Niklas a. ​if O'Leary timely notifies Niklas. b. ​under no circumstances. c. ​only if Lisa refuses to pay the check. d. ​only to the extent that Lisa overpaid her debt to Niklas.

in such form that the transferee becomes a holder

Mort negotiates an instrument to Nadia. Negotiation is the transfer of an instrument.... a. ​without the payment of a recognized medium of exchange. b. for valuable consideration under a contract.​ c. ​pursuant to preliminary contract discussions. d. ​in such form that the transferee becomes a holder.

an order instrument

Nina obtains a check payable to her from Oran. Nina signs the back and gives the check to Patricia. Patricia writes "pay to Patricia" above Nina's signature. When Patricia writes "Pay to Patricia" above Nina's signature, the check becomes..... a. ​a promissory note. b. ​an order instrument. c. ​a stolen instrument. d. ​a bearer instrument.

A special indorsement

Nina obtains a check payable to her from Oran. Nina signs the back and gives the check to Patricia. Patricia writes "pay to Patricia" above Nina's signature. When Patricia writes "pay to Patricia" above Nina's signature, Nina's signature becomes... a. ​a qualified indorsement. b. ​a blank indorsement. c. a special indorsement.​ d. ​a forgery.

a negotiation

Noah transfers an instrument to Olivia in a form and by a means that makes Olivia a "holder". This is.... a. ​none of the choices. b. ​a sale. c. ​a negotiation. d. ​an assignment.

relieves Nero of liability on the check

On the back of a check payable to Nero, he writes "pay to Odell, without recourse" and signs it. This... a. does not affect the check's negotiability or any party's liability. b. renders the check nonnegotiable. c. relieves Odell of liability on the check. d. relieves Nero of liability on the check.

thirty days

Orson signs a check "pay to the order of Painless Dental" drawn on Orson's account in Quantum Bank. To impose liability on Orson if the bank dishonors the check, Painless Dental should present it for payment within a. ​six months. b. ​one year. c. ​thirty days. d. ​ten days.

only state bank

Riley pays State Bank $500 plus a service fee to draw a check on itself payable to Torque Plumbing. The party that is responsible for paying the check is​ a. ​only Riley. b. ​both Riley and State Bank. c. ​none of the choices. d. ​only State Bank.

tomas in a civil suit

Tomas writes a check for $1,000 drawn on Unified Bank and presents it to Viola. Viola presents the check for payment to Unified Bank, which dishonors it because of insufficient funds. The party most likely liable to Viola is a. Tomas in a civil suit. b. Unity Bank in a civil suit. c. none of the choices. d. Tomas in a criminal prosecution.

an HDC

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 the check is a bearer instrument. b. ​not an HDC, because Wren did not acquire the check in good faith. c. ​not an HDC, because Wren did not acquire the check for value. d. ​an HDC.

the encoded information is correct

When processing a check, Sterling Bank encodes information, such as the amount of the check, on the item. Sterling thereby warrants to any subsequent bank or payor​