| 
  • If you are citizen of an European Union member nation, you may not use this service unless you are at least 16 years old.

  • Get control of your email attachments. Connect all your Gmail accounts and in less than 2 minutes, Dokkio will automatically organize your file attachments. You can also connect Dokkio to Drive, Dropbox, and Slack. Sign up for free.

View
 

Chapter 25 - Negotiable Instruments - Quiz

Page history last edited by abogado 4 years, 7 months ago

Law1-Fall2015-Quizzes

 

Chapter 25 – Negotiable instruments

 

 1.        On April 1 Richard arranges to buy a sixteen-speed bike from his neighbor Phil for $500. Phil agrees to deliver the bike on May 1. Richard writes a draft for $500 payable to Phil on May 1. In this situation, the draft is

 

            a.         a certificate of deposit.

            b.         a time draft.

            c.         a sight draft.

            d.         a promissory note.

 

 

 2.        InterComp normally sells $50,000 worth of software to Power Source, a retail elec­tronics store, each summer on terms requiring payment in sixty days.  One year, InterComp wants cash, but Power Source wants the usual sixty days.  To meet both needs, the parties can arrange

 

            a.         a certificate of deposit.

            b.         a bearer bond.

            c.         a trade acceptance.

            d.         an international letter of credit.

 

 

 3.        To obtain a business license, Bess writes a check to a certain state agency. Bess is

 

a.         the drawee.

b.         the drawer.

c.         the indorser.

d.         the payee.

 

 

 4.        Sarah has a checking account at Secure Bank. Sarah buys her roommate Sophie’s two tickets to a Broadway musical for $200. Sarah writes Sophie a check for the tickets. In this situation, Secure Bank is

 

            a.         the drawee.

            b.         the indorser.

            c.         the payee.

            d.         the drawer.

 

 

Fact Pattern  (Questions 5–6 apply)

Thalia signs an instrument unconditionally promising to pay to “Union Bank” $7500 with interest in installments with the final payment due June 1, 2017.

 

 5.        Refer to Fact Pattern  The instrument that Thalia signed is most likely

 

a.         a certificate of deposit.

b.         a draft.

c.         an order to pay.

d.         a promissory note.

 

 

 6.        Refer to Fact Pattern  With respect to this instrument, Union Bank is

 

a.         the drawee.

b.         the indorser.

c.         the maker.

d.         the payee.

 

 

 7.        Evermore Bank is both the drawer and the drawee with regard to a draft issued to Fernando. The draft is

 

            a.         a certificate of deposit.

            b.         a cashier’s check.

            c.         a nonnegotiable instrument.

            d.         a promissory note.

 

 

 8.        Willy deposits $5,000 with Home State Bank on July 1, 2012. Home State Bank promises to repay Willy the $5,000 plus 3 percent annual interest on July 1, 2017. This is

 

            a.         a certificate of deposit.

            b.         a cashier’s check.

            c.         none of the choices.

            d.         a draft.

 

             

 

 9.        To borrow money to finance the start-up of his business, Rollo executes an instrument in favor of Security Bank. For the instru­ment to be negotiable, the signature must be

 

            a.         anywhere on the instrument.

            b.         anywhere on the lower half of the instrument only.

            c.         in the lower left-hand corner of the instrument only.

            d.         in the lower right-hand corner of the instrument only.

 

             

 

 10.     Northwest Energy Corporation signs an instrument that states it is being exe­cuted “as per contract for a purchase of 4,000 barrels of oil dated September 1.” This instrument is

 

a.         negotiable.

b.         nonnegotiable, because information about the sale must be ob­tained from another source.

c.         nonnegotiable, because it states an express condition to payment.

d.         nonnegotiable, because the terms of the contract are not clear on the face of the instrument.

 

 

 11.     Bart, the owner of Clear Cut Corporation, signs an instrument that includes the phrase “payment for this note will be made from the pro­ceeds of next year’s timber sale.” This instrument is

 

a.         negotiable.

b.         nonnegotiable, because payment can be made only out of a particular source.

c.         nonnegotiable, because it states an express condition to payment.

d.         nonnegotiable, because the reasons for the note are not clear on its face.

 

 

 12.     Eden signs a promissory note payable to the order of First Mortgage Company. The note states that it is payable “with interest at the legal rate.” This note is

 

a.         negotiable.

b.         nonnegotiable, because it does not specify a rate of interest.

c.         nonnegotiable, because it is payable with interest.

d.         nonnegotiable, because the exact amount payable cannot be deter­mined from the face of the instrument.

 

 

 13.     Brie wants one of Cari’s purebred Dalmations. Brie signs an instrument in which she promises to pay Jasmine for a puppy. The instrument will be negotiable if it is payable in

 

            a.         goods of equal market value.

            b.         money.

            c.         any of the choices.

            d.         shares of stock.

 

 

 14.     Grace signs an instrument payable to the order of Hillside Credit Union “on or before” June 15. This instrument is

 

a.         negotiable.

b.         nonnegotiable, because the maker can move up the payment date.

c.         nonnegotiable, because moving up the payment date is optional.

d.         nonnegotiable, because the exact payment date cannot be deter­mined from the face of the instrument.

 

 

 15.     Payday Loans, Inc., signs an instrument payable to the order of Qiana that states, “The maker of this note at the date of maturity, April 1, 2016, can extend the time of pay­ment, but for no more than a rea­sonable time.” This instrument is

 

a.         negotiable.

b.         nonnegotiable, because it includes an extension clause.

c.         nonnegotiable, because it is not payable within a definite time.

d.         nonnegotiable, because it is payable to a specific payee.

 

             

 

 16.     Merry draws a check payable to “Cash” and presents it to National Bank for payment. This instrument is

 

a.         a bearer instrument.

b.         an order instrument.

c.         valid but nonnegotiable.

d.         void.

 

 

 17.     Efron borrows money to pay his tuition and signs a note payable to First Citizens Bank. The bank assigns the note to Guaranty Bank. The assignment

 

a.         does not affect Efron’s obligation to pay the note as promised.

b.         frees Efron of the obligation to pay the note.

c.         results in Guaranty Bank’s co-liability on the note with Efron.

d.         results in Guaranty Bank’s co-liability on the note with First Citizens Bank.

 

             

 

 18.     To buy a stuffed cow, Ken executes a check “pay to Laura or bearer” and gives it to Laura, who does not own a stuffed cow.  This check is

 

a.         negotiable.

b.         nonnegotiable, because it does not indicate a specific payee.

c.         nonnegotiable, because it may be a joke.

d.         nonnegotiable, because Laura does not own a stuffed cow.

 

 

 19.     Trixie signs a $1,500 note payable, at 4.25 percent interest, on October 1 to Urban Bank and writes on its face that it is “nonnegotiable.” This note is

 

a.         negotiable.

b.         nonnegotiable, because it is dated.

c.         nonnegotiable, because it is payable with interest.

d.         nonnegotiable, because it includes the notation “nonnegotiable.”

 

 

 20.     Cricket signs a check payable to the order of Discount Warehouse, Inc., that does not include a date. This check is

 

a.         negotiable.

b.         nonnegotiable, because it does not include a date.

c.         nonnegotiable, because it is payable to a corporation.

d.         nonnegotiable, because it is signed by the drawer.

 

             

 

 

 

 

 

Comments (0)

You don't have permission to comment on this page.