Question 1

A person can become an HDC only if he or she knows or has reason to know that an instrument is defective and is willing to assume the risk of its dishonor.

Accepted Answer

A) True 
 B)False

Question 2

Emil writes and signs a check payable to "Film Arts Cinema." George, Film Arts' manager, indorses the check "For deposit only." This is

Accepted Answer

A)  a blank indorsement.
B)  a qualified indorsement.
C)  a restrictive indorsement.
D)  a special indorsement.E) A) and C)
F) B) and C)

Question 3

Resources Inc. receives a check from Steel Products Company and indorses it with a stamped imprint of its name on the back. This converts the check to

Accepted Answer

A)  a bearer instrument.
B)  a non-transferable instrument.
C)  an order instrument.
D)  a special indorsement.E) B) and C)
F) A) and D)

Question 4

With a few exceptions, anyone who can ultimately trace his or her title to an instrument back to an HDC can acquire the rights and privileges of an HDC.

Accepted Answer

A) True 
 B)False

Question 5

Dani signs a note payable to Equity Credit, which transfers the note by assignment to Finance Collection. With respect to any defenses that Dani could have raised against Equity, most likely Dani can

Accepted Answer

A)  raise those defenses against Finance.
B)  no longer present any defense to payment.
C)  not assert those defenses against Finance.
D)  claim more defenses against Finance than Equity.E) B) and C)
F) A) and D)

Question 6

The authorized representative of an entity can negotiate an instrument payable to the entity only if the item has been converted into a bearer instrument.

Accepted Answer

A) True 
 B)False

Question 7

A payee or indorsee whose name is misspelled on an instrument

Accepted Answer

A)  can indorse with the misspelled name, the correct name, or both.
B)  must indorse with the misspelled name.
C)  must indorse with the correct name.
D)  is prevented from negotiating the instrument further.E) None of the above
F) A) and D)

Question 8

A check "payable to the order of Laura" is indorsed in blank if Laura simply delivers it without signing it.

Accepted Answer

A) True 
 B)False

Question 9

An instrument payable to two or more persons in the alternative, such as a check "payable to the order of Elena or Ferrar,"

Accepted Answer

A)  requires the indorsement of only of the parties to be negotiated.
B)  requires the indorsement of both of the parties to be negotiated.
C)  must be converted to a bearer instrument to be negotiated.
D)  is nonnegotiable.E) A) and B)
F) A) and C)

Question 10

In the event that there is a conflicting, superior claim to an instrument, a holder in due course will not be able to collect payment.

Accepted Answer

A) True 
 B)False

Question 11

Hedy draws a check "payable to the order of Ilsa or Jeto" and gives the check to Ilsa. Hedy's obligation on the check to Jeto is

Accepted Answer

A)  suspended.
B)  to render half of the amount of the check to each party.
C)  discharged.
D)  to hold the full amount of the check for the benefit of both payees.E) A) and C)
F) C) and D)

Question 12

If a check is made "payable to the order of Marcus or Nathan," both parties' indorsements are necessary for negotiation.

Accepted Answer

A) True 
 B)False

Exam 26: Transferability and Holder in Due Course

Emil writes and signs a check payable to "Film Arts Cinema." George, Film Arts' manager, indorses the check "For deposit only." This is

Correct Answer
verified

A person can become an HDC only if he or she knows or has reason to know that an instrument is defective and is willing to assume the risk of its dishonor.

Correct Answer
verified

Hedy draws a check "payable to the order of Ilsa or Jeto" and gives the check to Ilsa. Hedy's obligation on the check to Jeto is

Correct Answer
verified

With a few exceptions, anyone who can ultimately trace his or her title to an instrument back to an HDC can acquire the rights and privileges of an HDC.

Correct Answer
verified

A payee or indorsee whose name is misspelled on an instrument

Correct Answer
verified

An instrument payable to two or more persons in the alternative, such as a check "payable to the order of Elena or Ferrar,"

Correct Answer
verified

Resources Inc. receives a check from Steel Products Company and indorses it with a stamped imprint of its name on the back. This converts the check to

Correct Answer
verified

The authorized representative of an entity can negotiate an instrument payable to the entity only if the item has been converted into a bearer instrument.

Correct Answer
verified

If a check is made "payable to the order of Marcus or Nathan," both parties' indorsements are necessary for negotiation.

Correct Answer
verified

In the event that there is a conflicting, superior claim to an instrument, a holder in due course will not be able to collect payment.

Correct Answer
verified

A check "payable to the order of Laura" is indorsed in blank if Laura simply delivers it without signing it.

Correct Answer
verified

Dani signs a note payable to Equity Credit, which transfers the note by assignment to Finance Collection. With respect to any defenses that Dani could have raised against Equity, most likely Dani can

Correct Answer
verified

Exam 26: Transferability and Holder in Due Course

Emil writes and signs a check payable to "Film Arts Cinema." George, Film Arts' manager, indorses the check "For deposit only." This is

Correct AnswerverifiedShow Answer

A person can become an HDC only if he or she knows or has reason to know that an instrument is defective and is willing to assume the risk of its dishonor.

Correct AnswerverifiedShow Answer

Hedy draws a check "payable to the order of Ilsa or Jeto" and gives the check to Ilsa. Hedy's obligation on the check to Jeto is

Correct AnswerverifiedShow Answer

With a few exceptions, anyone who can ultimately trace his or her title to an instrument back to an HDC can acquire the rights and privileges of an HDC.

Correct AnswerverifiedShow Answer

A payee or indorsee whose name is misspelled on an instrument

Correct AnswerverifiedShow Answer

An instrument payable to two or more persons in the alternative, such as a check "payable to the order of Elena or Ferrar,"

Correct AnswerverifiedShow Answer

Resources Inc. receives a check from Steel Products Company and indorses it with a stamped imprint of its name on the back. This converts the check to

Correct AnswerverifiedShow Answer

The authorized representative of an entity can negotiate an instrument payable to the entity only if the item has been converted into a bearer instrument.

Correct AnswerverifiedShow Answer

If a check is made "payable to the order of Marcus or Nathan," both parties' indorsements are necessary for negotiation.

Correct AnswerverifiedShow Answer

In the event that there is a conflicting, superior claim to an instrument, a holder in due course will not be able to collect payment.

Correct AnswerverifiedShow Answer

A check "payable to the order of Laura" is indorsed in blank if Laura simply delivers it without signing it.

Correct AnswerverifiedShow Answer

Dani signs a note payable to Equity Credit, which transfers the note by assignment to Finance Collection. With respect to any defenses that Dani could have raised against Equity, most likely Dani can

Correct AnswerverifiedShow Answer

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verified

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