Question 1

Under the provisions of the UCC, in order to hold the drawer liable, an uncertified check must be presented for payment within a maximum of

Accepted Answer

A)   seven days.
B)   twenty days.
C)   thirty days.
D)   sixty days.E) B) and C)
F) None of the above

Question 2

A(n) ____________________ is a legal reason offered by a primary or secondary party for not paying a holder the amount due on a negotiable instrument.

Accepted Answer

The answer of A(n) ____________________ is a legal reason offered...

Question 3

Notice of dishonor must be given by a holder of a negotiable instrument to a secondary party within ____________________ business days after dishonor by the primary party.

Accepted Answer

The answer of Notice of dishonor must be given by...

Question 4

Notice of the dishonor of a negotiable instrument

Accepted Answer

A)   must be in writing.
B)   is necessary to hold a secondary party liable.
C)   must be given within ten days.
D)   is given to the first indorser first.E) All of the above
F) B) and D)

Question 5

To be a holder in due course, a person must take an instrument

Accepted Answer

A)   before its due date.
B)   the day after its due date.
C)   thirty days after its due date.
D)   ten days after its due date.E) A) and D)
F) All of the above

Question 6

The holder of a promissory note fails to present the note to the maker for payment on the date on which it is due. What effect does this have on the liability for payment?

Accepted Answer

A)   It requires court action in order to make the holder liable for payment.
B)   It requires court action in order to hold previous indorsers liable for payment.
C)   It releases the maker from liability for payment.
D)   It releases indorsers from liability for payment.E) None of the above
F) A) and B)

Question 7

If payment of a negotiable instrument is refused, it is said to be ____________________.

Accepted Answer

The answer of If payment of a negotiable instrument is...

Question 8

Nonnegotiable instruments are subject to the rules of ordinary contracts and can be transferred by assignment.

Accepted Answer

A) True 
 B)False

Question 9

The maker of a promissory note is considered to be a primary party.

Accepted Answer

A) True 
 B)False

Question 10

The Federal Trade Commission has enacted a federal regulation that prohibits the holder in due course concept from being used against consumers.

Accepted Answer

A) True 
 B)False

Question 11

After accepting a draft, the drawee is known as the ____________________.

Accepted Answer

The answer of After accepting a draft, the drawee is...

Question 12

What are the three requirements for a holder to become a holder in due course?

Accepted Answer

To quality as a holder in due course, yo...

Question 13

If the amount on an instrument is altered, a holder in due course can enforce the instrument for the original amount.

Accepted Answer

A) True 
 B)False

Question 14

Presentment of a note is

Accepted Answer

A)   a demand for payment.
B)   required to be made on or before the due date.
C)   able to be done by mail, in person, or through a bank.
D)   all of these.E) C) and D)
F) B) and C)

Question 15

Parties to a negotiable instrument who have liability for payment of the instrument are classified as either primary parties or secondary parties. Distinguish between primary parties and secondary parties.

Accepted Answer

Primary parties are those who ...

Question 16

One who is first obligated to pay a negotiable instrument is called a(n) ____________________ party.

Accepted Answer

The answer of One who is first obligated to pay...

Question 17

Duress as a legal reason (defense)  offered by a primary or secondary party for not paying a holder the amount due on an instrument is

Accepted Answer

A)   sometimes a personal defense.
B)   sometimes a real defense.
C)   generally no defense at all.
D)   sometimes a personal defense and sometimes a real defense.E) B) and C)
F) None of the above

Question 18

To qualify as a holder in due course, the holder must take the instrument

Accepted Answer

A)   for value.
B)   in good faith.
C)   without knowledge that the paper might be overdue.
D)   under all of the circumstances stated above.E) A) and B)
F) A) and C)

Question 19

A person who signs a negotiable instrument in an unauthorized manner is subject to ____________________ liability.

Accepted Answer

The answer of A person who signs a negotiable instrument...

Question 20

The amount of a promissory note was changed from $750 to $7,500 by the payee. The maker can be held liable for

Accepted Answer

A)   $750.
B)   $7,500.
C)   $6,750.
D)   nothing.E) B) and C)
F) All of the above

Exam 21: Rights and Duties of Parties

If payment of a negotiable instrument is refused, it is said to be ____________________.

Correct AnswerverifiedShow Answer

Parties to a negotiable instrument who have liability for payment of the instrument are classified as either primary parties or secondary parties. Distinguish between primary parties and secondary parties.

Correct AnswerverifiedPrimary parties are those who ...View AnswerShow Answer

After accepting a draft, the drawee is known as the ____________________.

Correct AnswerverifiedShow Answer

The Federal Trade Commission has enacted a federal regulation that prohibits the holder in due course concept from being used against consumers.

Correct AnswerverifiedShow Answer

Nonnegotiable instruments are subject to the rules of ordinary contracts and can be transferred by assignment.

Correct AnswerverifiedShow Answer

Presentment of a note is

Correct AnswerverifiedShow Answer

Notice of the dishonor of a negotiable instrument

Correct AnswerverifiedShow Answer

To qualify as a holder in due course, the holder must take the instrument

Correct AnswerverifiedShow Answer

The holder of a promissory note fails to present the note to the maker for payment on the date on which it is due. What effect does this have on the liability for payment?

Correct AnswerverifiedShow Answer

One who is first obligated to pay a negotiable instrument is called a(n) ____________________ party.

Correct AnswerverifiedShow Answer

A(n) ____________________ is a legal reason offered by a primary or secondary party for not paying a holder the amount due on a negotiable instrument.

Correct AnswerverifiedShow Answer

Under the provisions of the UCC, in order to hold the drawer liable, an uncertified check must be presented for payment within a maximum of

Correct AnswerverifiedShow Answer

The amount of a promissory note was changed from $750 to $7,500 by the payee. The maker can be held liable for

Correct AnswerverifiedShow Answer

Duress as a legal reason (defense) offered by a primary or secondary party for not paying a holder the amount due on an instrument is

Correct AnswerverifiedShow Answer

To be a holder in due course, a person must take an instrument

Correct AnswerverifiedShow Answer

Notice of dishonor must be given by a holder of a negotiable instrument to a secondary party within ____________________ business days after dishonor by the primary party.

Correct AnswerverifiedShow Answer

What are the three requirements for a holder to become a holder in due course?

Correct AnswerverifiedTo quality as a holder in due course, yo...View AnswerShow Answer

A person who signs a negotiable instrument in an unauthorized manner is subject to ____________________ liability.

Correct AnswerverifiedShow Answer

The maker of a promissory note is considered to be a primary party.

Correct AnswerverifiedShow Answer

If the amount on an instrument is altered, a holder in due course can enforce the instrument for the original amount.

Correct AnswerverifiedShow Answer

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To quality as a holder in due course, yo...
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