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Exam 17: Negotiable Instruments: Negotiability and Transferability

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Question 31

Multiple Choice

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With a(n) ________ instrument,the payee or subsequent holder can demand actual payment at any time.

A) time
B) demand
C) recourse
D) non-recourse
E) immediate

F) B) and D)
G) D) and E)

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Question 32

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The quality of a negotiable instrument that ensures it is mobile and available is called ________.

A) relative permanence
B) movability
C) alteration
D) conditional allotment
E) negotiation

F) A) and B)
G) B) and D)

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Question 33

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Which of the following satisfies the currency requirement for negotiability in the United States?

The bank upon which a check is drawn is the ________ bank.

Which of the following was the result on appeal in New Wave Technologies Inc.v.Legacy Bank of Texas,the case in the textbook involving whether endorsements of both payees were required in order for the bank involved to properly release funds on a check made out to "Maxim Solutions Group/New Wave Technologies" and providing on the back that "Each Payee Must Endorse Exactly As Drawn"?

According to the Uniform Commercial Code,what is a change,without consent,that modifies the obligation of a party to the instrument?

Stolen Purses.Sandra and Mary were having lunch at their favorite restaurant.Unfortunately,a thief stole their purses containing their ATM cards.Mary notified her bank the next day of the theft of the ATM card.Unfortunately,the card had already been used to fraudulently obtain over $1,000.Sandra thought back to her business law class and did not call her bank,however,because she believed that she would not be liable for any charges on the ATM card because of the rules involving forgeries.Nevertheless,a week or so later when Sandra was in the bank,she casually mentioned to the teller that she needed a new card because hers had been lost.She was shocked when a bank representative attempted to hold her responsible for hundreds of dollars of goods purchased with the ATM card.Sandra told the bank representative that she refused to cover the amounts,that she was moving her account,and that she wanted all preauthorized payments and EFTs stopped immediately.Which of the following is true regarding the bank's obligation to end preauthorized payments?

The party receiving the money from the draft is the ________.

A note is a promise by the maker of the note to pay a drawee.

The person creating the endorsement is the delegator,and the person receiving the endorsement is the delegatee.

An automated signature satisfies the Uniform Commercial Code signature requirement for negotiable instruments.

When the depositary bank is the same bank as the payor bank,the check is referred to as a(n) ________ item.

What is a traveler's check?

Stolen Purses.Sandra and Mary were having lunch at their favorite restaurant.Unfortunately,a thief stole their purses containing their ATM cards.Mary notified her bank the next day of the theft of the ATM card.Unfortunately,the card had already been used to fraudulently obtain over $1,000.Sandra thought back to her business law class and did not call her bank,however,because she believed that she would not be liable for any charges on the ATM card because of the rules involving forgeries.Nevertheless,a week or so later when Sandra was in the bank,she casually mentioned to the teller that she needed a new card because hers had been lost.She was shocked when a bank representative attempted to hold her responsible for hundreds of dollars of goods purchased with the ATM card.Sandra told the bank representative that she refused to cover the amounts,that she was moving her account,and that she wanted all preauthorized payments and EFTs stopped immediately.Which of the following is true regarding the bank's obligation to stop EFT transfers?

Stolen Purses.Sandra and Mary were having lunch at their favorite restaurant.Unfortunately,a thief stole their purses containing their ATM cards.Mary notified her bank the next day of the theft of the ATM card.Unfortunately,the card had already been used to fraudulently obtain over $1,000.Sandra thought back to her business law class and did not call her bank,however,because she believed that she would not be liable for any charges on the ATM card because of the rules involving forgeries.Nevertheless,a week or so later when Sandra was in the bank,she casually mentioned to the teller that she needed a new card because hers had been lost.She was shocked when a bank representative attempted to hold her responsible for hundreds of dollars of goods purchased with the ATM card.Sandra told the bank representative that she refused to cover the amounts,that she was moving her account,and that she wanted all preauthorized payments and EFTs stopped immediately.For how much can the bank hold Mary responsible based on the fraudulent use of the card?

According to the Uniform Commercial Code,a check is a special kind of note.

Which of the following types of paper requires delivery and an endorsement by the holder?

Check 21 allows banks to forgo sending original checks as part of the collection or return process and instead send a truncated version.

Uniform Commercial Code Article 3 labels commercial paper as negotiable instruments.

Susie Smith signed a note agreeing to pay "Annie Greene,Mary Hodge" $1,000.The payment was for painting her house.An issue with the note was that it spelled Annie's last name "Greene," whereas Annie spells it simply "Green." Annie and Mary had a disagreement regarding how to split up the funds for painting the house.Annie proceeded to sign the note on the back "Annie Green" and presented it to Bill Brown to satisfy a debt that she owed him.Bill Brown endorsed the note on the back and took it to the bank for payment.Mary is unhappy because she did not obtain any of the funds and stated that Annie could not legally endorse the instrument because it misspelled her name and because Mary did not sign it.Which of the following is true regarding Mary's claim that the endorsement by Annie was illegal because the note misspelled Annie's name?