Question 1

Talia, who is not a Urban Bank customer, attempts to cash a check drawn on the bank. The check is considered dishonored if Urban Bank​

Accepted Answer

A)   ​refuses to pay it.
B)   ​charges a fee to cash it.
C)   ​asks Talia for reasonable identification.
D)   ​asks Talia to sign a receipt for the payment on the check.E) A) and B)
F) A) and C)

Question 2

An indorsement is a signature, with or without additional words or statements.

Accepted Answer

A) True 
 B)False

Question 3

Edna is the payee of a bearer instrument-a promissory note in the amount of $10,000. Flem offers to irrigate Edna's ranch next week in exchange for the note. She agrees and delivers the note to Flem. Flem is​

Accepted Answer

A)   ​an HDC, because he promised to perform services at a future date.
B)   ​an HDC, because the transferor was the original payee on the note.
C)   ​not an HDC, because he did not acquire the instrument in good faith.
D)   ​not an HDC, because he did not yet give value for the instrument.E) A) and B)
F) A) and C)

Question 4

Emily writes and signs a check payable to "Five Star Cinema." George, Five Star's manager, indorses the check "For deposit only." This is​

Accepted Answer

A)   ​a blank indorsement.
B)   ​a qualified indorsement.
C)   ​a restrictive indorsement.
D)   ​a special indorsement.E) A) and B)
F) A) and C)

Question 5

A holder takes an instrument for value if he or she accepts the instrument in payment of a preexisting obligation.

Accepted Answer

A) True 
 B)False

Question 6

Entrepreneur LLC owes Sole Saver Auto Dealership $2,000. Entrepreneur executes a note to Sole Saver as security for the debt. This security​

Accepted Answer

A)   ​does not constitute sufficient consideration for HDC status.
B)   ​does not satisfy the value requirement for HDC status.
C)   ​satisfies the consideration requirement for HDC status.
D)   ​satisfies the value requirement for HDC status.E) B) and D)
F) A) and B)

Question 7

For a check, a "reasonable time" is ninety days after the date of the check.

Accepted Answer

A) True 
 B)False

Question 8

An indorser who does not wish to be liable on an instrument can use a qualified indorsement.

Accepted Answer

A) True 
 B)False

Question 9

Estes receives a check from Fleet Trucking Corporation. On the back of the check, Estes writes "pay to Garden Valley Bank only" and signs his name. This is​

Accepted Answer

A)   ​a blank indorsement.
B)   ​a qualified indorsement.
C)   ​a restrictive indorsement.
D)   ​a special indorsement.E) B) and D)
F) None of the above

Question 10

There are some limitations on the shelter principle.

Accepted Answer

A) True 
 B)False

Question 11

A special indorsement does not specify a particular indorsee.

Accepted Answer

A) True 
 B)False

Question 12

An instrument can only be transferred by negotiation.

Accepted Answer

A) True 
 B)False

Question 13

A person who receives an instrument as a gift automatically possesses the rights of a holder in due course.

Accepted Answer

A) True 
 B)False

Question 14

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​

Accepted Answer

A)   ​avoids the risk of loss from theft of the instrument.
B)   ​relieves himself from liability on the instrument.
C)   ​converts a legitimate negotiable instrument into a stolen instrument.
D)   ​locks the instrument into the bank collection process.E) A) and D)
F) A) and C)

Question 15

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment.

Accepted Answer

A) True 
 B)False

Question 16

The effect of a conditional indorsement on the back of an instrument differs from the effect of conditional language that appears on its face.

Accepted Answer

A) True 
 B)False

Question 17

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC under any circumstances.

Accepted Answer

A) True 
 B)False

Question 18

A holder takes an instrument for value by promising to perform in the future.

Accepted Answer

A) True 
 B)False

Question 19

Dan signs a check payable to Ed, who indorses the back, gives it to Foodway Market, and receives cash. The transfer of the check from Dan to Ed is​

Accepted Answer

A)   ​an assignment.
B)   ​a negotiation.
C)   ​none of the choices.
D)   ​a sale.E) None of the above
F) A) and B)

Question 20

A bearer instrument can be converted into an order instrument through indorsement.

Accepted Answer

A) True 
 B)False

Exam 16: Transferability and Holder in Due Course

A holder takes an instrument for value if he or she accepts the instrument in payment of a preexisting obligation.

Correct AnswerverifiedShow Answer

Dan signs a check payable to Ed, who indorses the back, gives it to Foodway Market, and receives cash. The transfer of the check from Dan to Ed is​

Correct AnswerverifiedShow Answer

Talia, who is not a Urban Bank customer, attempts to cash a check drawn on the bank. The check is considered dishonored if Urban Bank​

Correct AnswerverifiedShow Answer

A person who receives an instrument as a gift automatically possesses the rights of a holder in due course.

Correct AnswerverifiedShow Answer

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment.

Correct AnswerverifiedShow Answer

The effect of a conditional indorsement on the back of an instrument differs from the effect of conditional language that appears on its face.

Correct AnswerverifiedShow Answer

An indorsement is a signature, with or without additional words or statements.

Correct AnswerverifiedShow Answer

A person who in good faith acquires a negotiable instrument from a thief cannot become an HDC under any circumstances.

Correct AnswerverifiedShow Answer

An instrument can only be transferred by negotiation.

Correct AnswerverifiedShow Answer

A special indorsement does not specify a particular indorsee.

Correct AnswerverifiedShow Answer

Entrepreneur LLC owes Sole Saver Auto Dealership $2,000. Entrepreneur executes a note to Sole Saver as security for the debt. This security​

Correct AnswerverifiedShow Answer

For a check, a "reasonable time" is ninety days after the date of the check.

Correct AnswerverifiedShow Answer

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​

Correct AnswerverifiedShow Answer

Emily writes and signs a check payable to "Five Star Cinema." George, Five Star's manager, indorses the check "For deposit only." This is​

Correct AnswerverifiedShow Answer

An indorser who does not wish to be liable on an instrument can use a qualified indorsement.

Correct AnswerverifiedShow Answer

Edna is the payee of a bearer instrument-a promissory note in the amount of $10,000. Flem offers to irrigate Edna's ranch next week in exchange for the note. She agrees and delivers the note to Flem. Flem is​

Correct AnswerverifiedShow Answer

A bearer instrument can be converted into an order instrument through indorsement.

Correct AnswerverifiedShow Answer

Estes receives a check from Fleet Trucking Corporation. On the back of the check, Estes writes "pay to Garden Valley Bank only" and signs his name. This is​

Correct AnswerverifiedShow Answer

There are some limitations on the shelter principle.

Correct AnswerverifiedShow Answer

A holder takes an instrument for value by promising to perform in the future.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Dan signs a check payable to Ed, who indorses the back, gives it to Foodway Market, and receives cash. The transfer of the check from Dan to Ed is

Correct Answer
verified

Talia, who is not a Urban Bank customer, attempts to cash a check drawn on the bank. The check is considered dishonored if Urban Bank

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Entrepreneur LLC owes Sole Saver Auto Dealership $2,000. Entrepreneur executes a note to Sole Saver as security for the debt. This security

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Emily writes and signs a check payable to "Five Star Cinema." George, Five Star's manager, indorses the check "For deposit only." This is

Correct Answer
verified

Correct Answer
verified

Edna is the payee of a bearer instrument-a promissory note in the amount of $10,000. Flem offers to irrigate Edna's ranch next week in exchange for the note. She agrees and delivers the note to Flem. Flem is

Correct Answer
verified

Correct Answer
verified

Estes receives a check from Fleet Trucking Corporation. On the back of the check, Estes writes "pay to Garden Valley Bank only" and signs his name. This is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified