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Exam 17: Negotiable Instruments: Negotiability and Transferability

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Question 41

Multiple Choice

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Which of the following is money stored electronically on microchips,magnetic strips,or other computer media that would allow for the elimination of physical currency?

A) Electronic funds
B) Quasi-currency
C) Digital cash
D) Cyber-cash
E) Bitcoins

F) C) and D)
G) B) and E)

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Question 42

Multiple Choice

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Which of the following is an incorrect statement regarding the Uniform Commercial Code's signature requirement for a negotiable instrument?

A) An "X" will suffice if the party intended that the mark be placed on the instrument and uses that mark to identify himself.
B) A signature may be made by means of a device or machine.
C) A signature may be made manually.
D) The signature of an agent on behalf of the principal binds the principal and satisfies the signature requirement.
E) The Uniform Commercial Code is fairly strict in interpreting what constitutes a signature.

F) A) and B)
G) D) and E)

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Question 43

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The law recognizes an oral negotiable instrument if the facts demonstrate the intent of the maker or drawer to create a negotiable instrument through words alone.

A ________ is a specific draft,drawn by the owner of a checking account,ordering the bank to pay the payee from that drawer's account.

In order to satisfy the negotiable instrument writing requirement of the Uniform Commercial Code,a written document must have two characteristics: relative permanence and movability.

A negotiable instrument may be oral if the parties agree.

An ordinary IOU satisfies the "unconditional promise or order to pay" requirement for a negotiable instrument.

Which law controls how financial institutions handle customer information,ultimately providing greater privacy protections to financial institution customers?

Book Payment.Molly and Pat signed a contract providing that "Pat will furnish the correct used business law book for use in Molly's business law class; and in return,on August 15,2017,Molly promises to pay Pat $50 for the book." Molly took the book and planned to pay Pat.Meanwhile,Pat properly assigned the contract Molly had signed to Jack.When Molly went to class,however,she discovered that the book was the incorrect book.When Jack asked Molly for payment,Molly refused.Molly told Jack that the book was useless to her and that she was not paying either him or Pat anything for it.Jack told Molly that he had an enforceable assignment in the form of a negotiable instrument and that he could collect regardless of whether the book was useless.Molly did not believe him.Continuing with her attempt to save money on books,Molly agreed to buy Tim's United States history book for $40.She had an oral agreement with Tim that he would give her the book and that she would pay him in three days.This time Molly got the right book.Tim,in writing,properly assigned the right to the $40 payment to Richard.Richard asked Molly for the money.Molly admitted her agreement with Tim but told Richard that she was not going to pay him because he did not have a negotiable instrument.Molly also purchased a communications book from Sam promising in writing to give him in return the next day,to his order,a used DVD player she owned.Which of the following is true regarding Molly's assertion that Richard did not have a negotiable instrument?

Generally,assuming no negligence on the part of the victim,when an endorsement on a check has been forged and properly reported to the bank,which party is the party ultimately liable for the loss?

If there is no room on an instrument for an endorsement,or if all the room has been taken by previous endorsements,a(n) ________ may be attached.

When you write a check at the grocery store,you are the ________,your bank is the ________,and the grocery store is the ________.

When a specific payee is named in an instrument,this is known as a(n) ________ instrument.

An accord is an additional piece of paper with endorsements that is firmly attached to the negotiable instrument.

Stolen Purses.Sandra and Mary were having lunch at their favorite restaurant.Unfortunately,a thief stole their purses containing their ATM cards.Mary notified her bank the next day of the theft of the ATM card.Unfortunately,the card had already been used to fraudulently obtain over $1,000.Sandra thought back to her business law class and did not call her bank,however,because she believed that she would not be liable for any charges on the ATM card because of the rules involving forgeries.Nevertheless,a week or so later when Sandra was in the bank,she casually mentioned to the teller that she needed a new card because hers had been lost.She was shocked when a bank representative attempted to hold her responsible for hundreds of dollars of goods purchased with the ATM card.Sandra told the bank representative that she refused to cover the amounts,that she was moving her account,and that she wanted all preauthorized payments and EFTs stopped immediately.For how much can the bank hold Sandra responsible based on the fraudulent use of the card?

In the event of a misspelled name,how may the holder endorse the document?

In a sales contract,how can the buyer make payment?

What is the difference between a cashier's check and a certified check? Can a bank refuse to certify a check? Can a bank refuse to honor a cashier's check?

A draft is an order by a drawer to a drawee to pay a payee.

The party giving the order to pay on a draft is the ________.