Question 1

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy is

Accepted Answer

A)   an extraordinary holder in due course.
B)   an ordinary check passer.
C)   an ordinary holder.
D)   an ordinary holder in due course.E) C) and D)
F) None of the above

Question 2

A holder takes an instrument for value if he or she accepts the instru?ment as security for an antecedent debt.

Accepted Answer

A) True 
 B)False

Question 3

Dora receives a check from Eagle Corporation. Dora in?dorses the check to First National Bank by writing "pay to First Nat'l Bank only" and signing her name. This is

Accepted Answer

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

Question 4

Troy transfers a draft by signing it and delivering it to Uma. Troy is

Accepted Answer

A)   an indorser.
B)   a draft dodger.
C)   a drafter.
D)   a promisor.E) A) and B)
F) B) and C)

Question 5

Todd indorses a check, "Pay to Interstate Trucking if they deliver the lumber by May 1, 2010." This is

Accepted Answer

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

Question 6

Ralph wants to transfer an instrument to Sigrid that requires Ralph's indorsement, but there is no room on the instrument. Ralph

Accepted Answer

A)   can attest in writing that he would sign the instrument if possible.
B)   cannot transfer the instrument to Sigrid.
C)   can sign an allonge and affix it to the instrument.
D)   can sign a separate piece of paper and file it for later reference.E) C) and D)
F) All of the above C

Question 7

A restrictive indorsement requires an indorsee to comply with certain in?structions regarding the funds involved.

Accepted Answer

A) True 
 B)False

Question 8

A transfer by negotiation can make it possible for a holder to receive more rights in the instrument than its prior possessor had.

Accepted Answer

A) True 
 B)False

Question 9

Any installment note payment that is less than the amount due will put the holder on notice that some of the principal is overdue.

Accepted Answer

A) True 
 B)False

Question 10

Good faith, for purposes of UCC Article 3, is "honesty in fact and the ob?servance of reasonable commercial standards of fair dealing."

Accepted Answer

A) True 
 B)False

Question 11

Ina signs a check payable to Jan and gives it to her. Jan in?dorses the back, and transfers the check to Ked. To negotiate the check to Lois, Ked must

Accepted Answer

A)   write "Ked" on the back and deliver the check to Lois.
B)   write "pay to the order of Lois [signed] Ked" on the back and de?liver the check to Lois.
C)   only deliver the check to Lois.
D)   transfer the check through the drawee bank.E) B) and C)
F) A) and D)

Question 12

Nina wants to transfer a check to Opie. The check is not defective if it

Accepted Answer

A)   has an obvious irregularity on its face.
B)   has been previously honored.
C)   is incomplete so that an element of negotiability is lacking.
D)   is overdue.E) B) and C)
F) A) and D) B

Question 13

DigiTech Corporation pays its employees every two weeks. Eve gets her paycheck, indorses the back ("Eve Anderson"), and, on her lunch hour, goes to cash it at DigiTech's bank, First State Bank. On the street, in a crowd, she loses the check. Greg Smith finds it. Has the check been nego?tiated to Greg? Greg signs the back of the check beneath Eve's signature and cashes it. What might Eve have done to avoid this loss?

Accepted Answer

Eve's paycheck was negotiated to Greg. Eve's blank in?dorse?ment on the back of the check converted it from an order instru?ment to a bearer instrument. A bearer instrument can be nego?tiated by delivery alone. Delivery occurred when Greg found the check. To have avoided the loss that Eve suffered, she might have been more careful with the check, or at least not signed it until she was at the bank. Also, her in?dorsement might have included on the back of the check the words "For deposit only." In that circumstance, Greg would have been unable to le?gitimately cash the check.

Question 14

Under the shelter principle, one who acquires his or her title through an HDC acquires the HDC's rights.

Accepted Answer

A) True 
 B)False

Question 15

Velma transfers a note by signing it and delivering it to Woz. Woz is

Accepted Answer

A)   a delivery person.
B)   an indorsee.
C)   a note passer.
D)   a promisee.E) C) and D)
F) B) and C)

Question 16

If a note is payable on a Sunday or holiday, then the payment of the note will be due on the next business day.

Accepted Answer

A) True 
 B)False

Question 17

Colby fraudulently induces Dian to sign a note. Colby sells the note to Elen, who does not know of the fraud and takes the note for value and in good faith, and thus becomes an HDC. Elen sells the note to Fred, who sells the note back to Colby. Does Colby acquire Elen's HDC rights in the note?

Accepted Answer

No. A person who does not qualify as an ...

Question 18

Tyrone transfers a note by signing it and delivering it to Uri. Tyrone is

Accepted Answer

A)   an indorser.
B)   a notary.
C)   a note passer.
D)   a promisor.E) A) and B)
F) None of the above

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A holder takes an instrument for value if he or she accepts the instru?ment as payment for an antecedent debt.

Accepted Answer

A) True 
 B)False

Exam 25: Transferability and Holder in Due Course

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy is

Correct Answer
verified

A holder takes an instrument for value if he or she accepts the instru?ment as security for an antecedent debt.

Correct Answer
verified

Dora receives a check from Eagle Corporation. Dora in?dorses the check to First National Bank by writing "pay to First Nat'l Bank only" and signing her name. This is

Correct Answer
verified

Troy transfers a draft by signing it and delivering it to Uma. Troy is

Correct Answer
verified

Todd indorses a check, "Pay to Interstate Trucking if they deliver the lumber by May 1, 2010." This is

Correct Answer
verified

Ralph wants to transfer an instrument to Sigrid that requires Ralph's indorsement, but there is no room on the instrument. Ralph

Correct Answer
verified
C

A restrictive indorsement requires an indorsee to comply with certain in?structions regarding the funds involved.

Correct Answer
verified

A transfer by negotiation can make it possible for a holder to receive more rights in the instrument than its prior possessor had.

Correct Answer
verified

Any installment note payment that is less than the amount due will put the holder on notice that some of the principal is overdue.

Correct Answer
verified

Good faith, for purposes of UCC Article 3, is "honesty in fact and the ob?servance of reasonable commercial standards of fair dealing."

Correct Answer
verified

Ina signs a check payable to Jan and gives it to her. Jan in?dorses the back, and transfers the check to Ked. To negotiate the check to Lois, Ked must

Correct Answer
verified

Nina wants to transfer a check to Opie. The check is not defective if it

Correct Answer
verified
B

Under the shelter principle, one who acquires his or her title through an HDC acquires the HDC's rights.

Correct Answer
verified

Velma transfers a note by signing it and delivering it to Woz. Woz is

Correct Answer
verified

If a note is payable on a Sunday or holiday, then the payment of the note will be due on the next business day.

Correct Answer
verified

Colby fraudulently induces Dian to sign a note. Colby sells the note to Elen, who does not know of the fraud and takes the note for value and in good faith, and thus becomes an HDC. Elen sells the note to Fred, who sells the note back to Colby. Does Colby acquire Elen's HDC rights in the note?

Correct Answer
verified
No. A person who does not qualify as an ...
View Answer

Tyrone transfers a note by signing it and delivering it to Uri. Tyrone is

Correct Answer
verified

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

Correct Answer
verified

A holder takes an instrument for value if he or she accepts the instru?ment as payment for an antecedent debt.

Correct Answer
verified

Exam 25: Transferability and Holder in Due Course

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy is

Correct AnswerverifiedShow Answer

A holder takes an instrument for value if he or she accepts the instru?ment as security for an antecedent debt.

Correct AnswerverifiedShow Answer

Dora receives a check from Eagle Corporation. Dora in?dorses the check to First National Bank by writing "pay to First Nat'l Bank only" and signing her name. This is

Correct AnswerverifiedShow Answer

Troy transfers a draft by signing it and delivering it to Uma. Troy is

Correct AnswerverifiedShow Answer

Todd indorses a check, "Pay to Interstate Trucking if they deliver the lumber by May 1, 2010." This is

Correct AnswerverifiedShow Answer

Ralph wants to transfer an instrument to Sigrid that requires Ralph's indorsement, but there is no room on the instrument. Ralph

Correct AnswerverifiedC

A restrictive indorsement requires an indorsee to comply with certain in?structions regarding the funds involved.

Correct AnswerverifiedShow Answer

A transfer by negotiation can make it possible for a holder to receive more rights in the instrument than its prior possessor had.

Correct AnswerverifiedShow Answer

Any installment note payment that is less than the amount due will put the holder on notice that some of the principal is overdue.

Correct AnswerverifiedShow Answer

Good faith, for purposes of UCC Article 3, is "honesty in fact and the ob?servance of reasonable commercial standards of fair dealing."

Correct AnswerverifiedShow Answer

Ina signs a check payable to Jan and gives it to her. Jan in?dorses the back, and transfers the check to Ked. To negotiate the check to Lois, Ked must

Correct AnswerverifiedShow Answer

Nina wants to transfer a check to Opie. The check is not defective if it

Correct AnswerverifiedB

Under the shelter principle, one who acquires his or her title through an HDC acquires the HDC's rights.

Correct AnswerverifiedShow Answer

Velma transfers a note by signing it and delivering it to Woz. Woz is

Correct AnswerverifiedShow Answer

If a note is payable on a Sunday or holiday, then the payment of the note will be due on the next business day.

Correct AnswerverifiedShow Answer

Colby fraudulently induces Dian to sign a note. Colby sells the note to Elen, who does not know of the fraud and takes the note for value and in good faith, and thus becomes an HDC. Elen sells the note to Fred, who sells the note back to Colby. Does Colby acquire Elen's HDC rights in the note?

Correct AnswerverifiedNo. A person who does not qualify as an ...View AnswerShow Answer

Tyrone transfers a note by signing it and delivering it to Uri. Tyrone is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A holder takes an instrument for value if he or she accepts the instru?ment as payment for an antecedent debt.

Correct AnswerverifiedShow Answer

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C

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B

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No. A person who does not qualify as an ...
View Answer

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