MHR 461 Ch 13 negotiable instruments Exam Questions and Anwers
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MHR 461 Ch 13 negotiable instruments
Institution
MHR 461 Ch 13 Negotiable Instruments
MHR 461 Ch 13 negotiable instruments Exam Questions and Anwers
A negotiable instrument is a promise by one party to pay a undefined sum of money to another party. There are two parties: the maker and the payee. While the amount to be paid may vary, the date of payment must be set at a specific...
MHR 461 Ch 13 negotiable instruments Exam
Questions and Anwers
A negotiable instrument is a promise by one party to pay a undefined sum of money to
another party. There are two parties: the maker and the payee. While the amount to be paid
may vary, the date of payment must be set at a specific time in the future. - answers✔✔False
A negotiable instrument may be transferred in two basic ways. If the instrument is made "to
the order" of the payee, the payee must (1) endorse the instrument and (2) deliver the
instrument to a third party. If the instrument is made "to bearer," the party in possession of
the instrument is required only to deliver it to transfer it. - answers✔✔True
Negotiable instruments payable "to bearer" are considered the safest form. - answers✔✔False
If a commercial instrument is nonnegotiable, it falls under the common law, not the UCC -
answers✔✔True
To meet the UCC's requirements for negotiability, an instrument must be in writing. -
answers✔✔True
To meet the UCC's requirements for negotiability, an instrument must be payable to a
specific party. - answers✔✔False
To be ordinary holder of a negotiable instrument, the holder must give value for it, take it
without knowledge that it is overdue or defective, and must take it in good faith. -
answers✔✔False
Orders to pay include drafts and checks. - answers✔✔True
Promises to pay include drafts and checks. - answers✔✔False
The party who issues or creates a document that requests payment, probably from a bank, is
called the drawer. - answers✔✔True
The party who agrees to make a payment to another party, based on a document presented to
it, such as a bank, is called the drawee. - answers✔✔True
The drawee owes money to the drawer in a negotiable instrument. - answers✔✔True
The party to receive a payment from a negotiable instrument is called the payee. -
answers✔✔True
A check is a draft drawn on a bank and payable on demand. - answers✔✔True
A cashier's check is a form of check in which the bank is both the drawer and the drawee. -
answers✔✔True
A note involves two parties, the maker and the payee. Payment must be on demand. -
answers✔✔False
When real estate is used to back up a note, it is called a collateral note. - answers✔✔False
When the maker of a note promises to repay the note in specific installments over time, it is a
balloon note. - answers✔✔False
When the payee is concerned about the quality of a draft, it may be submitted to the drawee
for confirmation. That is called an acceptance or bankers' acceptance. - answers✔✔True
The only property that is typically exempt from attachment is personal property worth over
$1,000. - answers✔✔False
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