Question 1

A special endorsement is one having no words other than the name of the indorser.

Accepted Answer

A special endorsement includes the signature of the endorser and specifies the person to whom or to whose order the instrument is to be payable, unlike a blank endorsement which contains only the name of the endorser.

Question 2

James wants to indorse a check to Janice, but wishes to rid himself from all further liabilities. Which of the following types of indorsements is James likely to use in this case?

Accepted Answer

A qualified indorsement is when the indorser adds a phrase like "without recourse" to the indorsement, which means that the indorser does not want to assume any liability if the check is not honored. This is the type of indorsement James would use to avoid further liabilities.

Question 3

A qualified indorsermakes no warranties regarding the instrument.

Accepted Answer

A qualified indorser disclaims some warranties, such as the warranty of title, but still makes certain warranties, including that the instrument has not been altered and that they have no knowledge of any insolvency proceedings against the maker or acceptor.

Question 4

The trailing edge is the right side of a check when looking at it from the front.

Accepted Answer

The trailing edge of a check refers to the left side when looking at it from the front, opposite to the leading edge which is entered first into a check scanner or reader.

Question 5

For what does an indorser of a negotiable instrument become liable?

Accepted Answer

The answer of For what does an indorser of a...

Question 6

Which of the following best describes a restrictive indorsement?

Accepted Answer

A restrictive indorsement is one that restricts the further negotiation of the instrument, often specifying a particular use, such as deposit only, or designating a particular person to whom the instrument can be further negotiated.

Question 7

An instrument made payable to more than one person is not negotiable.

Accepted Answer

An instrument can still be negotiable when made payable to more than one person, depending on how it is worded (e.g., payable to them jointly, severally, or alternatively). The negotiability depends on the terms of the instrument and compliance with the requirements of negotiability under the Uniform Commercial Code or applicable law.

Question 8

The Uniform Commercial Code does not require an allonge to be attached to an instrument.

Accepted Answer

The Uniform Commercial Code (UCC) requires that an allonge (a paper attached to a negotiable instrument for the purpose of receiving further endorsements when the original document has no more space for signatures) must be firmly attached to the instrument to become a part of it. This ensures the allonge and the instrument are treated as a single document.

Question 9

Delivery of a bearer instrument is sufficient to pass title.

Accepted Answer

Delivery of a bearer instrument is sufficient to pass title because possession of the instrument itself signifies ownership, and no endorsement is required.

Question 10

Where should a check be indorsed?

Accepted Answer

Checks are typically endorsed on the back along the trailing edge to ensure that the endorsement is captured when the check is processed. This is the standard location recognized by banks and financial institutions for the endorsement, which is necessary for the check to be cashed or deposited.

Question 11

Parties can be discharged from an obligation by a discharge of their debts in bankruptcy.

Accepted Answer

Bankruptcy can provide a mechanism for discharging certain debts, which legally releases parties from their obligation to pay those debts, subject to the rules and provisions of the bankruptcy code.

Question 12

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

Accepted Answer

The answer of The warranty liability of a qualified indorser...

Question 13

A depository bank receiving a check with a restrictive indorsement, such as "for deposit " must always honor the restriction.

Accepted Answer

A restrictive indorsement, like "for deposit only," legally restricts how the check can be further negotiated or processed, obligating the depository bank to comply with the specified restriction.

Question 14

A(n)is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument. ​

Accepted Answer

An indorsement is a signature on the back of a negotiable instrument, such as a check, which may include directions or limitations regarding its use or liability.

Question 15

is a unilateral act of a holder of an instrument, usually without consideration, whereby the holder gives up rights on the instrument.

Accepted Answer

Renunciation is the act where the holder of an instrument voluntarily gives up their rights to the instrument without receiving any consideration in return. This is a unilateral decision by the holder.

Question 16

Which of the following is true regarding the negotiator of bearer paper?

Accepted Answer

One who negotiates a bearer instrument by delivery alone does not guarantee payment. This is because bearer instruments are designed to be easily transferable without the need for endorsement. The transfer of a bearer instrument through delivery alone transfers title to the holder, but does not inherently include any warranties about payment, unlike with order instruments where endorsements can carry such warranties.

Question 17

When a negotiable instrument is lost, this automatically discharges the obligation of the holder.

Accepted Answer

The loss of a negotiable instrument does not automatically discharge the obligation of the holder. The holder can take steps to obtain a duplicate or enforce the instrument against the issuer or other parties liable on the instrument, subject to the fulfillment of certain conditions and providing adequate protection against loss to the issuer.

Question 18

A indorsement designates the particular person to whom payment should be made.

Accepted Answer

A special indorsement specifies the person to whom the endorser makes the instrument payable, thus designating the particular person to whom payment should be made.

Question 19

Explain liabilities for payment of instrument

Accepted Answer

The answer of Explain liabilities for payment of instrument...

Question 20

A cancellation made by mistake is not effective.

Accepted Answer

A cancellation made by mistake is not effective because it lacks the necessary intent to terminate the contract.

Quiz 23: Negotiation and Discharge

A special endorsement is one having no words other than the name of the indorser.

James wants to indorse a check to Janice, but wishes to rid himself from all further liabilities. Which of the following types of indorsements is James likely to use in this case?

A qualified indorsermakes no warranties regarding the instrument.

The trailing edge is the right side of a check when looking at it from the front.

For what does an indorser of a negotiable instrument become liable?

Which of the following best describes a restrictive indorsement?

An instrument made payable to more than one person is not negotiable.

The Uniform Commercial Code does not require an allonge to be attached to an instrument.

Delivery of a bearer instrument is sufficient to pass title.

Where should a check be indorsed?

Parties can be discharged from an obligation by a discharge of their debts in bankruptcy.

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

A depository bank receiving a check with a restrictive indorsement, such as "for deposit " must always honor the restriction.

A(n) is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument.

is a unilateral act of a holder of an instrument, usually without consideration, whereby the holder gives up rights on the instrument.

Which of the following is true regarding the negotiator of bearer paper?

When a negotiable instrument is lost, this automatically discharges the obligation of the holder.

A indorsement designates the particular person to whom payment should be made.

Explain liabilities for payment of instrument

A cancellation made by mistake is not effective.

Quiz 23: Negotiation and Discharge

A special endorsement is one having no words other than the name of the indorser.

James wants to indorse a check to Janice, but wishes to rid himself from all further liabilities. Which of the following types of indorsements is James likely to use in this case?

A qualified indorsermakes no warranties regarding the instrument.

The trailing edge is the right side of a check when looking at it from the front.

For what does an indorser of a negotiable instrument become liable?

Which of the following best describes a restrictive indorsement?

An instrument made payable to more than one person is not negotiable.

The Uniform Commercial Code does not require an allonge to be attached to an instrument.

Delivery of a bearer instrument is sufficient to pass title.

Where should a check be indorsed?

Parties can be discharged from an obligation by a discharge of their debts in bankruptcy.

The warranty liability of a qualified indorser is the same as that of an unqualified indorser.

A depository bank receiving a check with a restrictive indorsement, such as "for deposit " must always honor the restriction.

A(n) is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument. ​

is a unilateral act of a holder of an instrument, usually without consideration, whereby the holder gives up rights on the instrument.

Which of the following is true regarding the negotiator of bearer paper?

When a negotiable instrument is lost, this automatically discharges the obligation of the holder.

A indorsement designates the particular person to whom payment should be made.

Explain liabilities for payment of instrument

A cancellation made by mistake is not effective.

A(n) is a signature on the back of an instrument along with any directions or limitations regarding use of or liability for the instrument.