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Exam 22: The Essentials of Negotiability

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Question 31

Multiple Choice

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

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) None of the above
F) A) and B)

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Question 32

Multiple Choice

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To borrow funds to finance his business, Rollo executes an instrument in favor of Security Bank. For the instrument to be negotiable, the signature must be

A) anywhere on the instrument.
B) anywhere on the lower half of the instrument only.
C) in the lower left -hand corner of the instrument only.
D) in the lower right -hand corner of the instrument only.

E) A) and B)
F) A) and C)

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Question 33

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The Uniform Commercial Code applies to transactions involving negotiable instruments, except for bank deposits and collections.

Ollie negotiates an order instrument to Phil by

A bearer is a person to whom an instrument is made payable.

With respect to negotiability, it is necessary to know when the maker, drawee, or acceptor is required to pay.

A conditional promise or order can be negotiable if the terms are included in writing in an instrument.

Brie signs an instrument in which she promises to pay Carmen a certain price for her Dodge Dart. The instrument will be negotiable if it meets all of the requirements for negotiability, including that it is payable in

Fact Pattern 22-1 Erin draws a check payable to "Foodland" to buy groceries. Refer to Fact Pattern 22-1. Erin's check is most likely

Because a check specifies no time for payment, a check is a time instrument.

An instrument recorded on an impermanent surface can still qualify as a negotiable instrument.

Brad, the owner of Clear Cut Corporation, signs an instrument that includes the phrase "payment for this note will be made from the proceeds of next year's timber sale." This instrument is

For a note or a certificate of deposit to be negotiable, it must be signed by the drawer .

To finance the purchase of a house from Sander, Tobias signs an instrument promising to pay to "Uno Mortgage Company" $200,000 with interest in installments with the final payment due July 10, 2047. To be negotiable, this instrument must include the signature of

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

On the back of an envelope, Phoebe writes, "I promise to pay Quint or bearer $600 on demand. [Signed] Phoebe." What type of instrument is this? Is it negotiable? If not, why not?

Fact Pattern 22-3 To borrow the funds to pay tuition at State College, Tia signs an instrument unconditionally promising to pay to "United Credit Company" $17,500 with interest in installments with the final payment due June 30, 2028. Refer to Fact Pattern 22-3. With respect to this instrument, Tia is

An indorsement is most often written on the back of an instrument itself.

Mort negotiates an instrument to Nell. This is the transfer of an instrument

When an instrument is payable on or before a stated date, the instrument is clearly nonnegotiable.