Question 1

On a sheet of paper,Elle writes,without her signature,"I acknowledge that I owe Frank $600,payable out of the proceeds of the sale of my car,a 1995 Honda Civic,which I promise to advertise 'For Sale' next week.Payment is to be made on or before six months from today." What type of instrument is this? Is it nego?tiable? If not,why not?

Accepted Answer

This instrument is a promissory note,but...

Question 2

An instrument that promises to pay "in gold" can be negotiable.

Accepted Answer

A) True 
 B)False  False

Question 3

A promissory note payable to "bearer" is not negotiable.

Accepted Answer

A) True 
 B)False

Question 4

An undated instrument is not negotiable.

Accepted Answer

A) True 
 B)False  False

Question 5

Fact Pattern 24-1A (Questions A1-A2 apply) 
Flik draws a check payable to "DeliMart" to buy groceries.
-Refer to Fact Pattern 24-1A.Flik's check is most likely

Accepted Answer

A)  a certificate of deposit.
B)  an order to pay.
C)  a promise to pay.
D)  a promissory note.E) A) and D)
F) B) and D)

Question 6

Karen writes on a piece of paper,"I owe you $600," signs it,and gives it to Lou.This instrument is

Accepted Answer

A)  negotiable.
B)  nonnegotiable,because it does not include an express promise to pay.
C)  nonnegotiable,because it does not recite any consideration.
D)  nonnegotiable,because it does not state any conditions to payment.E) All of the above
F) A) and D)

Question 7

To obtain office supplies for Doctors Medical Clinic,Elmo executes a draft in favor of Flynn.A draft is

Accepted Answer

A)  a conditional promise to pay money.
B)  an unconditional written order to pay money.
C)  a qualified promise to set aside a sum of money.
D)  a restricted promise to deliver goods at a future date.E) All of the above
F) None of the above

Question 8

Fact Pattern 24-1A (Questions A1-A2 apply) 
Flik draws a check payable to "DeliMart" to buy groceries.
-Refer to Fact Pattern 24-1A.With respect to Flik's check,DeliMart is

Accepted Answer

A)  the drawee.
B)  the drawer.
C)  the maker.
D)  the payee.E) B) and D)
F) All of the above D

Question 9

A signature can consist of a word,mark,or symbol.

Accepted Answer

A) True 
 B)False

Question 10

To be negotiable,an instrument must not be on material that lends itself to permanence.

Accepted Answer

A) True 
 B)False

Question 11

An instrument payable "with interest" must specify a particular rate to be negotiable.

Accepted Answer

A) True 
 B)False

Question 12

For an instrument to be negotiable,it need not be signed.

Accepted Answer

A) True 
 B)False

Question 13

A negotiable instrument can function as a substitute for cash.

Accepted Answer

A) True 
 B)False

Question 14

Shad signs a promissory note payable to Theresa "with interest" on which he conspicuously notes that it is "nonnegotiable." This instru?ment is

Accepted Answer

A)  negotiable.
B)  nonnegotiable,because it includes the notation "nonnegotiable."
C)  nonnegotiable,because it does not specify a rate of interest.
D)  nonnegotiable,because the exact amount payable cannot be deter?mined from the face of the instrument.E) B) and C)
F) A) and D)

Question 15

Fact Pattern 24-2A (Questions A3-A4 apply) 
Commodity Sales Corporation and Resource Purchasing Company enter a contract for a sale of unprocessed silver.Commodity Sales draws a draft unconditionally ordering Resource Purchasing to pay $50,000 to Commodity Sales's order in sixty days.Resource Purchasing signs and dates the draft.
-Refer to Fact Pattern 24-2A.On this instrument,Commodity Sales is

Accepted Answer

A)  the banker.
B)  the drawer.
C)  the maker.
D)  the trader.E) None of the above
F) A) and D)

Question 16

Fact Pattern 24-2A (Questions A3-A4 apply) 
Commodity Sales Corporation and Resource Purchasing Company enter a contract for a sale of unprocessed silver.Commodity Sales draws a draft unconditionally ordering Resource Purchasing to pay $50,000 to Commodity Sales's order in sixty days.Resource Purchasing signs and dates the draft.
-Refer to Fact Pattern 24-2A.This instrument is

Accepted Answer

A)  a banker's acceptance.
B)  a nonnegotiable instrument.
C)  a promissory note.
D)  a trade acceptance.E) A) and D)
F) B) and C)

Question 17

Hayley signs an instrument payable to the order of InstaCredit,Inc.,that allows a holder to demand payment of the entire amount due,with inter?est,if Hayley fails to make a payment.This instrument is

Accepted Answer

A)  negotiable.
B)  nonnegotiable,because a holder can move up the payment date.
C)  nonnegotiable,because moving up the payment date is conditional.
D)  nonnegotiable,because the exact payment date cannot be deter?mined from the face of the instrument.E) A) and C)
F) All of the above

Question 18

Kelly signs an instrument in favor of Leo that states it is "subject to a cer?tain agreement between Kelly and Mona." This instru?ment is

Accepted Answer

A)  negotiable.
B)  nonnegotiable,because it is made subject to a separate agreement.
C)  nonnegotiable,because it refers to a separate agreement.
D)  nonnegotiable,because Kelly and Mona are not the same persons.E) B) and D)
F) A) and B)

Question 19

A statement in an instrument that payment can be made only out of a particular fund or source renders it nonnegotiable.

Accepted Answer

A) True 
 B)False

Question 20

Ryan signs an instrument using an "R" with a circle around it.With this mark for a signature,the instrument is

Accepted Answer

A)  negotiable.
B)  nonnegotiable,because an initial does not state the signer's name.
C)  nonnegotiable,because this mark is a symbol,not a signature.
D)  nonnegotiable,because a simple mark implies a lack of serious intent.E) B) and C)
F) A) and D)

Exam 24: The Function Creation of Negotiable Instruments

Correct Answer
verified
This instrument is a promissory note,but...
View Answer

An instrument that promises to pay "in gold" can be negotiable.

Correct Answer
verified
False

A promissory note payable to "bearer" is not negotiable.

Correct Answer
verified

An undated instrument is not negotiable.

Correct Answer
verified
False

Fact Pattern 24-1A (Questions A1-A2 apply) Flik draws a check payable to "DeliMart" to buy groceries. -Refer to Fact Pattern 24-1A.Flik's check is most likely

Correct Answer
verified

Karen writes on a piece of paper,"I owe you $600," signs it,and gives it to Lou.This instrument is

Correct Answer
verified

To obtain office supplies for Doctors Medical Clinic,Elmo executes a draft in favor of Flynn.A draft is

Correct Answer
verified

Fact Pattern 24-1A (Questions A1-A2 apply) Flik draws a check payable to "DeliMart" to buy groceries. -Refer to Fact Pattern 24-1A.With respect to Flik's check,DeliMart is

Correct Answer
verified
D

A signature can consist of a word,mark,or symbol.

Correct Answer
verified

To be negotiable,an instrument must not be on material that lends itself to permanence.

Correct Answer
verified

An instrument payable "with interest" must specify a particular rate to be negotiable.

Correct Answer
verified

For an instrument to be negotiable,it need not be signed.

Correct Answer
verified

A negotiable instrument can function as a substitute for cash.

Correct Answer
verified

Shad signs a promissory note payable to Theresa "with interest" on which he conspicuously notes that it is "nonnegotiable." This instru?ment is

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Hayley signs an instrument payable to the order of InstaCredit,Inc.,that allows a holder to demand payment of the entire amount due,with inter?est,if Hayley fails to make a payment.This instrument is

Correct Answer
verified

Kelly signs an instrument in favor of Leo that states it is "subject to a cer?tain agreement between Kelly and Mona." This instru?ment is

Correct Answer
verified

A statement in an instrument that payment can be made only out of a particular fund or source renders it nonnegotiable.

Correct Answer
verified

Ryan signs an instrument using an "R" with a circle around it.With this mark for a signature,the instrument is

Correct Answer
verified

Exam 24: The Function Creation of Negotiable Instruments

Correct AnswerverifiedThis instrument is a promissory note,but...View AnswerShow Answer

An instrument that promises to pay "in gold" can be negotiable.

Correct AnswerverifiedFalse

A promissory note payable to "bearer" is not negotiable.

Correct AnswerverifiedShow Answer

An undated instrument is not negotiable.

Correct AnswerverifiedFalse

Fact Pattern 24-1A (Questions A1-A2 apply) Flik draws a check payable to "DeliMart" to buy groceries. -Refer to Fact Pattern 24-1A.Flik's check is most likely

Correct AnswerverifiedShow Answer

Karen writes on a piece of paper,"I owe you $600," signs it,and gives it to Lou.This instrument is

Correct AnswerverifiedShow Answer

To obtain office supplies for Doctors Medical Clinic,Elmo executes a draft in favor of Flynn.A draft is

Correct AnswerverifiedShow Answer

Fact Pattern 24-1A (Questions A1-A2 apply) Flik draws a check payable to "DeliMart" to buy groceries. -Refer to Fact Pattern 24-1A.With respect to Flik's check,DeliMart is

Correct AnswerverifiedD

A signature can consist of a word,mark,or symbol.

Correct AnswerverifiedShow Answer

To be negotiable,an instrument must not be on material that lends itself to permanence.

Correct AnswerverifiedShow Answer

An instrument payable "with interest" must specify a particular rate to be negotiable.

Correct AnswerverifiedShow Answer

For an instrument to be negotiable,it need not be signed.

Correct AnswerverifiedShow Answer

A negotiable instrument can function as a substitute for cash.

Correct AnswerverifiedShow Answer

Shad signs a promissory note payable to Theresa "with interest" on which he conspicuously notes that it is "nonnegotiable." This instru?ment is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Hayley signs an instrument payable to the order of InstaCredit,Inc.,that allows a holder to demand payment of the entire amount due,with inter?est,if Hayley fails to make a payment.This instrument is

Correct AnswerverifiedShow Answer

Kelly signs an instrument in favor of Leo that states it is "subject to a cer?tain agreement between Kelly and Mona." This instru?ment is

Correct AnswerverifiedShow Answer

A statement in an instrument that payment can be made only out of a particular fund or source renders it nonnegotiable.

Correct AnswerverifiedShow Answer

Ryan signs an instrument using an "R" with a circle around it.With this mark for a signature,the instrument is

Correct AnswerverifiedShow Answer

Correct Answer
verified
This instrument is a promissory note,but...
View Answer

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False

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False

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D

Correct Answer
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