Question 1

Susan, who owned a pet store, bought a number of dog leashes from a business called Happy Paws in Florida. Susan, who was somewhat unorganized, was very busy and told her assistant, Zach, to pay her bills, including the bill she owed to Happy Paws. Susan had lost the invoice. She knew that she owed Happy Paws $1,000, and simply told Zach to send Happy Paws $1,000. She told Zach she did not know the address, but that he should be able to find it on the Internet. Zach checked on the Internet and found a listing and an address for a company called Happy Paws in North Carolina. Zach, therefore, sent the check for $1,000 to Happy Paws in North Carolina. The bookkeeper for Happy Paws in North Carolina did not act in bad faith and thought that the check was for goods sent to Susan. The treasurer endorsed Susan's check along with a number of other checks to ABC Financing Company in order to receive operating funds. Happy Paws in North Carolina was not affiliated with the Florida Happy Paws. In fact, Happy Paws in North Carolina sold booties for children. Happy Paws in North Carolina was also in financial difficulty and went bankrupt. Happy Paws in Florida contacted Susan regarding the $1,000 they were owed. Susan and Zach then discovered their mistake. They requested that Happy Paws in North Carolina refund the money, but bankruptcy prevented that. Susan then attempted to get the funds returned from ABC Financing. What is the most likely result regarding Susan's attempt to receive the funds from ABC Financing and why?

Accepted Answer

It is unlikely that Susan will be able t...

Question 2

In the process of negotiation, what is meant by the term "delivery"?

Accepted Answer

A)   The physical handing of an instrument from someone entitled to it to the person intended to receive it.
B)   The passing of a warranty that the instrument is collectible.
C)   The passing of a warranty that an instrument qualifies as a negotiable instrument.
D)   The passing of a warranty that the recipient is a holder.
E)   The passing of a warranty that the recipient is a holder in due course.F) B) and D)
G) B) and C)

Question 3

"Lost Check." Susan Jones teaches business law at Learn-A-Lot University. Learn-A-Lot requested that all of the teachers ask the students to wear on the day of the first football game T-shirts with "Learn-A-Lot University Football" printed on the front. All of the teachers were asked to sell the shirts in class. A student, Bobby, wrote a check to Susan for $10 for payment for one of the shirts. Bobby, however, put Susan Jones as the payee. Susan wanted to turn the check over to the school, so on the back of the check, she wrote, "Susan Jones, without recourse." She then gave the check to the treasurer for Learn-A-Lot University. Unfortunately, the treasurer for Learn-A-Lot dropped the check on the ground as she was going to the bank. A student, Shifty, found the check and promptly took it to the bank and cashed it. The treasurer, Bernice, did not want to get into trouble, so she asked Susan to personally cover the check because she said that Susan had endorsed the check on the back guaranteeing payment.
-Was the check properly delivered to Shifty?

Accepted Answer

A)   Yes, because it was bearer paper, delivery occurred whenever possession was taken.
B)   Yes, because it was order paper, delivery occurred whenever possession was taken.
C)   Yes, but only because it was thereafter presented to the bank and cashed.
D)   Yes, because both Shifty and the bank are considered holders in due course.
E)   No, because he was not entitled to receive it.F) C) and D)
G) A) and C)

Question 4

Once an instrument is negotiable, it remains negotiable.

Accepted Answer

A) True 
 B)False

Question 5

Barry is sending his brother-in-law and agent, Richard, who he does not particularly trust, to deposit into Barry's business bank account a check belonging to Barry. What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Accepted Answer

Barry should sign the back of ...

Question 6

Which of the following types of endorsements is used when the instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party?

Accepted Answer

A)   Conditional endorsement.
B)   Trust endorsement.
C)   Endorsement to prohibit further endorsement.
D)   Bearer endorsement.
E)   Conditional bearer endorsement.F) All of the above
G) D) and E)

Question 7

What is the effect of an unqualified, blank endorsement?

Accepted Answer

A)   It turns previous order paper into bearer paper.
B)   It turns previous bearer paper into order paper.
C)   It turns a blank endorsement into a special endorsement.
D)   It turns an allonge into an endorsement.
E)   It turns an endorsement into an allonge.F) A) and E)
G) None of the above

Question 8

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Accepted Answer

A)   An acknowledged instrument.
B)   A contract instrument.
C)   A negotiable instrument.
D)   A holder instrument.
E)   A delivered instrument.F) B) and E)
G) A) and D)

Exam 27: Negotiation, Holder in Due Course, and Defenses

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Correct Answer
verified

Correct Answer
verified

In the process of negotiation, what is meant by the term "delivery"?

Correct Answer
verified

What is the effect of an unqualified, blank endorsement?

Correct Answer
verified

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Correct Answer
verified

Which of the following types of endorsements is used when the instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party?

Correct Answer
verified

Correct Answer
verified
It is unlikely that Susan will be able t...
View Answer

Once an instrument is negotiable, it remains negotiable.

Correct Answer
verified

Barry is sending his brother-in-law and agent, Richard, who he does not particularly trust, to deposit into Barry's business bank account a check belonging to Barry. What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Correct Answer
verified
Barry should sign the back of ...
View Answer

Exam 27: Negotiation, Holder in Due Course, and Defenses

Which of the following is a written document signed by the maker or drawer with an unconditional promise or order to pay a certain sum in money on demand or at a specified time to the order of bearer?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the process of negotiation, what is meant by the term "delivery"?

Correct AnswerverifiedShow Answer

What is the effect of an unqualified, blank endorsement?

Correct AnswerverifiedShow Answer

A time instrument becomes overdue at any date after the expressed due date on the instrument.

Correct AnswerverifiedShow Answer

Which of the following types of endorsements is used when the instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIt is unlikely that Susan will be able t...View AnswerShow Answer

Once an instrument is negotiable, it remains negotiable.

Correct AnswerverifiedShow Answer

Barry is sending his brother-in-law and agent, Richard, who he does not particularly trust, to deposit into Barry's business bank account a check belonging to Barry. What is the best way for Barry to endorse the check to attempt to limit any misappropriation?

Correct AnswerverifiedBarry should sign the back of ...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
It is unlikely that Susan will be able t...
View Answer

Correct Answer
verified

Correct Answer
verified
Barry should sign the back of ...
View Answer