Question

QUESTION 16

1. A post-dated check is a negotiable instrument.

True

False

3 points   

QUESTION 17

1. A bank that certifies (in other words, accepts) a check has what type of liability for the payment of the check?

	A.	Secondary.
	B.	Accommodation liability.
	C.	Primary.
	D.	None.

3 points   

QUESTION 18

1. Real defenses, in the context of negotiable instruments, include

	A.	duress that makes the contract void.
	B.	illegality that makes the contract void.
	C.	discharge in bankruptcy.
	D.	all of the above.

3 points   

QUESTION 19

1. Indorsers of a check incur liability on the check only if the check is presented for payment and it is dishonored, and they receive notice of the dishonor. If there is more than one indorser on that check, the indorsers are liable in reverse chronological order.

True

False

3 points   

QUESTION 20

1. A person who writes a check and who, by negligence, contributes to the material alteration of a check can be liable to a person who, in good faith, took the altered check and paid value for it based on the altered amount.

True

False

3 points   

QUESTION 21

1. An oral stop payment order is good

	A.	for six months even if no written stop payment order is filed.
	B.	for fourteen days.
	C.	forever.
	D.	for twelve months.

3 points   

QUESTION 22

1. If an instrument is payable to a person and that person’s name is misspelled, the instrument must be returned to the maker or the drawer for correction before being further negotiated.

True

False

3 points   

QUESTION 23

1. A blank indorsement specifies no particular person and the instrument becomes

	A.	bearer paper.
	B.	order paper.
	C.	a promissory note.
	D.	worthless.

3 points   

QUESTION 24

1. A person who takes an instrument with a restrictive indorsement must pay or apply money given for the instrument consistently with the indorsement.

True

False

3 points   

QUESTION 25

1. An instrument in which a maker makes an unconditional promise in writing to pay to the order of another person or bearer a specific sum of money on demand or at a specific time is a

	A.	draft.
	B.	check.
	C.	promissory note.
	D.	certificate of deposit.

3 points   

QUESTION 26

1. A bank is not liable to its customer if the bank fails to pay out on a check, even if the customer has the money in his or her account and there is no reason for the bank to refuse to pay the check.

True

False

3 points   

QUESTION 27

1. If an instrument is payable to the order of Jack and Jill, that instrument can only be negotiated

	A.	by Jack signing it.
	B.	by Jill signing it.
	C.	by Jack and Jill both signing it.
	D.	by Jack and Jill both signing it and transferring it to a holder.

3 points   

QUESTION 28

1. The effect of the Federal Trade Commission rule requiring certain language on a note or installment sale contract for a consumer transaction is to make a potential holder of the note or contract subject to all claims and defenses of the consumer.

True

False

3 points   

QUESTION 29

1. Presentment warranties concerning a draft (such as a check) include the following:

	A.	B, C and D.
	B.	The warrantor is a person entitled to enforce payment of the draft.
	C.	The draft has not been altered.
	D.	The warrantor has no knowledge that the signature of the drawer of the draft has not been authorized.

3 points   

QUESTION 30

1. A personal defense means the instrument itself is invalid.

True

False

3 points   

QUESTION 31

1. Jack Jones is treasurer of XYZ Company. Jack, who is an authorized signer on the company’s accounts and who generally handles the company's accounts, indorses a check, which was made payable to XYZ Company, the following way: “For Deposit Only, HHFCU Acct # 12345. XYZ Company. Jack Jones.” He deposits the check into the HHFCU account. The check is dishonored and notice of dishonor is given to all signers on the instrument. HHFCU can only look to XYZ Company, and not Jack, to recover payment.

True

False

3 points   

QUESTION 32

1. A holder who possesses a check used to pay for an illegal, void transaction is a holder in due course.

True

False

3 points   

QUESTION 33

1. Jack writes a check to Jill for $100.00. The drawee is Walden Savings Bank. Jill indorses the check in blank and gives it to her brother, Bill. Bill indorses it and delivers it to the teller at Hudson Heritage Federal Credit Union with this indorsement: “For deposit only, Hudson Heritage Federal Credit Union account #1234.” The check is

	A.	no longer a negotiable instrument.
	B.	a conditional promissory note.
	C.	indorsed with a restrictive indorsement.
	D.	indorsed with a qualified indorsement.

Answer 1