Question 1

A(n) ________ is the person receiving an endorsement.
A) Allonge
B) Transferor
C) Transferee
D) Endorser
E) Endorsee

Accepted Answer

The correct term for the person receiving an endorsement is "Endorsee."

Question 2

Which kind of endorsement places a condition on payment?
A) Conditional endorsement.
B) Trust endorsement.
C) Endorsement to prohibit further endorsement.
D) Bearer endorsement.
E) Conditional bearer endorsement.

Accepted Answer

A conditional endorsement specifies a condition under which the endorser must meet before the payee can collect the payment, thus placing a condition on the payment.

Question 3

Which of the following is not an example of a restrictive endorsement?
A) The endorsement for deposit or collection only.
B) The endorsement to prohibit further endorsement.
C) The conditional endorsement.
D) The trust endorsement.
E) The endorsement specifying without recourse.

Accepted Answer

The endorsement specifying "without recourse" is a qualified endorsement, not a restrictive one, as it limits the endorser's liability rather than restricting the use of the instrument.

Question 4

The statement, "Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?
A) Conditional endorsement.
B) Trust endorsement.
C) Endorsement to prohibit further endorsement.
D) Bearer endorsement.
E) Conditional bearer endorsement.

Accepted Answer

This statement is an example of an endorsement to prohibit further endorsement. By specifying "Pay to Constance only," the endorser is limiting the ability to further negotiate or transfer the instrument to anyone other than Constance.

Question 5

An order instrument is payable to ________.
A) anyone holding the instrument
B) any bank.
C) a specific, named payee.
D) a future person to be determined.
E) any trust.

Accepted Answer

An order instrument is specifically designed to be payable to a specific, named payee or their order, making it distinct from bearer instruments, which are payable to anyone holding them.

Question 6

Which of the following words are necessary for an endorsement to be considered qualified?
A) Addition of the words, "special endorsement."
B) Addition of the words, "restricted endorsement."
C) Addition of the words, "without recourse."
D) Addition of the words, "conditional entrustment."
E) Addition of the words, "trust endorsement."

Accepted Answer

A qualified endorsement is one that limits the liability of the endorser. The phrase "without recourse" is used to indicate that the endorser does not assume responsibility if the instrument is dishonored.

Question 7

Which of the following is a version of a qualified endorsement?
A) Blank, special, and allonge.
B) Special and allonge, but not blank.
C) Special and blank, but not allonge.
D) Blank and allonge, but not special.
E) There are no qualified endorsements.

Accepted Answer

The answer of Which of the following is a version...

Question 8

When an instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party, which kind of endorsement is used?
A) Conditional endorsement.
B) Trust endorsement.
C) Endorsement to prohibit further endorsement.
D) Bearer endorsement.
E) Conditional bearer endorsement.

Accepted Answer

A trust endorsement, also known as a fiduciary endorsement, is used when an instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party. This type of endorsement specifies that the endorsee (the agent or trustee) is acting in a fiduciary capacity.

Question 9

The words, "Pay to Allan Smith" followed by the endorser's signature create ________
A) a blank endorsement
B) a qualified endorsement
C) a special endorsement
D) a limited endorsement
E) a specific endorsement

Accepted Answer

A special endorsement is created when the endorser signs and specifies a particular endorsee to whom or to whose order the instrument is to be payable, such as "Pay to Allan Smith."

Question 10

Which of the following is the term for a person creating an endorsement?
A) An allonge
B) A transferor
C) A transferee
D) An endorser
E) An endorsee

Accepted Answer

An endorser is the term for a person who creates an endorsement, which is an act of signing one's name on the back of a check or other negotiable instrument to make it payable to someone else or to transfer ownership.

Question 11

A(n) ________ endorsement is the endorser's signature along with a named endorsee.
A) Blank
B) Allonge
C) Qualified
D) Special
E) Specific

Accepted Answer

A special endorsement is when the endorser signs their name and specifies the person to whom the endorser wishes to make the instrument payable. This contrasts with a blank endorsement, which does not specify a payee.

Question 12

Which of the following is the payee's or last endorsee's signature and nothing else?
A) A special endorsement.
B) An allonge.
C) A blank endorsement.
D) A qualified endorsement.
E) A restricted endorsement.

Accepted Answer

A blank endorsement consists of the payee's or last endorsee's signature alone, without specifying a new payee, which allows any holder of the instrument to claim its value.

Question 13

For negotiation, which of the following types of paper require delivery and an endorsement by the holder?
A) Bearer
B) Delivery
C) Order
D) Transfer
E) Acknowledgement

Accepted Answer

Order paper requires delivery and an endorsement by the holder to be negotiated. This means the paper must be physically handed over and endorsed (signed) by the person transferring it to the new holder.

Question 14

Julianne has received a check that she would like to cash, however there is no room for her to endorse the check herself. Julianne can attach a(n) ________ which would allow her to endorse the check.
A) acknowledgement
B) bearer paper
C) special endorsement
D) allonge
E) order paper

Accepted Answer

An allonge is a piece of paper attached to a negotiable instrument, such as a check, for the purpose of providing space for an endorsement when there is no room on the original document. This allows Julianne to endorse the check.

Question 15

What is the effect of an unqualified, blank endorsement?
A) It turns previous order paper into bearer paper.
B) It turns previous bearer paper into order paper.
C) It turns a blank endorsement into a special endorsement.
D) It turns an allonge into an endorsement.
E) It turns an endorsement into an allonge.

Accepted Answer

An unqualified, blank endorsement on a negotiable instrument, such as a check, means that the endorser simply signs their name on the back without specifying a new payee. This effectively turns the instrument from order paper, which requires endorsement to a specific individual, into bearer paper, which can be cashed or transferred by whoever holds it.

Question 16

Which of the following are types of unqualified endorsements?
A) Blank and special.
B) Allonge and special.
C) Allonge and blank.
D) Qualified and blank.
E) Qualified and special.

Accepted Answer

Blank and special endorsements are two types of unqualified endorsements. A blank endorsement specifies no endorsee and can be negotiated by possession alone, while a special endorsement specifies the endorsee, making the instrument payable to the identified person.

Question 17

For negotiation, ________ requires only delivery of the instrument to the holder by the payee
A) bearer paper
B) an endorsement
C) order paper
D) a transfer
E) an acknowledgement

Accepted Answer

Bearer paper requires only the physical delivery of the instrument to transfer ownership and does not require an endorsement.

Question 18

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?
A) Blank qualified.
B) Special qualified.
C) Restrictive.
D) Conditional.
E) Trust.

Accepted Answer

Restrictive endorsements limit the transferability of the instrument or control the manner of payment by specifying conditions or instructions for the use of the funds.

Question 19

In order to be negotiated, ________ must be endorsed as well as delivered.
A) order paper
B) allonge
C) bank note
D) a blank endorsement
E) qualified endorsements

Accepted Answer

Order paper requires endorsement and delivery to be negotiated. This is because the ownership of the document (and thus the rights to the money or property it represents) is transferred through endorsement.

Question 20

Talon has a check that is written out to him from his aunt for a graduation gift. This type of instrument is known as a(n) ________.
A) order
B) bearer
C) transfer
D) payee
E) acknowledgement

Accepted Answer

An order instrument is a financial document that is payable to a specific person or entity. In this case, the check written out to Talon by his aunt for a graduation gift is an example of an order instrument because it is specifically made out to him, indicating that only he (or someone he endorses the check to) can cash or deposit it.

Quiz 27: Negotiation, Holder in Due Course, and Defenses

A(n) ________ is the person receiving an endorsement.

Which kind of endorsement places a condition on payment?

Which of the following is not an example of a restrictive endorsement?

The statement, "Pay to Constance only," with the endorser's signature is an example of which of the following types of endorsements?

An order instrument is payable to ________.

Which of the following words are necessary for an endorsement to be considered qualified?

Which of the following is a version of a qualified endorsement?

When an instrument is being transferred to an agent or trustee for the benefit of either the endorser or a third party, which kind of endorsement is used?

The words, "Pay to Allan Smith" followed by the endorser's signature create ________

Which of the following is the term for a person creating an endorsement?

A(n) ________ endorsement is the endorser's signature along with a named endorsee.

Which of the following is the payee's or last endorsee's signature and nothing else?

For negotiation, which of the following types of paper require delivery and an endorsement by the holder?

Julianne has received a check that she would like to cash, however there is no room for her to endorse the check herself. Julianne can attach a(n) ________ which would allow her to endorse the check.

What is the effect of an unqualified, blank endorsement?

Which of the following are types of unqualified endorsements?

For negotiation, ________ requires only delivery of the instrument to the holder by the payee

Which of the following types of endorsements attempt to either limit the transferability of the instrument or control the manner of payment under the instrument?

In order to be negotiated, ________ must be endorsed as well as delivered.

Talon has a check that is written out to him from his aunt for a graduation gift. This type of instrument is known as a(n) ________.