Question 1

Which of the following requirements is necessary to be a holder in due course:

Accepted Answer

To be a holder in due course, the transferee must take the negotiable instrument in good faith, meaning they must have no knowledge or reason to believe that there is any defect or problem with the instrument, such as forgery or lack of payment. The other requirements listed (not giving value for the instrument or knowing the transferor) do not necessarily disqualify someone from being a holder in due course.

Question 2

To be found a holder in due course,a transferee must:

Accepted Answer

To be found a holder in due course, a transferee must have given value for the negotiable instrument, taken it without knowledge of any defects and in good faith. This requirement is essential for protecting the needs of both parties - the transferor and the transferee. If the transferee does not give value or has knowledge of defects, they may not be able to enforce the instrument against the transferor. The other choices listed may be relevant in certain situations, but they are not necessary requirements to be a holder in due course.

Question 3

If a negotiable instrument is assigned,the assignee has:

Accepted Answer

When a negotiable instrument is assigned, the assignee steps into the shoes of the assignor, meaning they inherit the same contract rights and responsibilities as the assignor had.

Question 4

Payment practices vary around the world.Islamic law is interpreted by many Muslims to mean that interest payments are prohibited by the Koran.In practice,this means that in countries that practice Islamic law:

Accepted Answer

In countries that practice Islamic law, borrowing is done by lending arrangements that pay the equivalent of interest. These arrangements are called "Islamic finance" and involve contracts such as profit-sharing agreements, leasing, and sale contracts with deferred payment. These contracts are structured to avoid charging interest, but they achieve the same economic outcome as interest-based financing.

Question 5

TP sells franchises in the Old Fast Food chain.TP sells a franchise to Choi for $100,000 by cashier's check.Choi then hears that TP is going out of business and tries to stop payment on the check.TP has already transferred the money to a third party who meets the UCC's requirements for a holder in due course.The bank paid that third party.TP declares it is out of business.In a subsequent lawsuit:

Accepted Answer

The third party is a holder in due course and has met the requirements under the UCC, which protects them from any claims and defenses against the original parties involved in the transaction. Choi's attempt to stop payment on the cashier's check is not enough to undermine the status of the third party as a holder in due course.

Question 6

The one who agreed to make a payment,such as a bank making a payment based on a document presented to it is:

Accepted Answer

The drawee is the one who agrees to make a payment based on a document presented to them, such as a bank making a payment based on a check presented to it. The payee is the one who receives the payment, and the beneficiary is the one who benefits from the payment, but neither of these options are the one who agrees to make the payment in the first place. The drawer is the one who writes the check, but they are not the one making the payment, as it is the bank who ultimately agrees to release the funds. Therefore, the best choice is D - the drawee.

Question 7

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

Accepted Answer

The answer of If a negotiable instrument is transferred by...

Question 8

Which of the following requirements is necessary to be a holder in due course:

Accepted Answer

The requirement necessary to be a holder in due course is that the transferee must give value for the negotiable instrument. This means that the holder must have paid money or given something of value in exchange for the instrument, and not simply received it as a gift or for other non-valuable consideration. Knowledge of the transferor or the transfer being made in good faith are not necessary for holder in due course status.

Question 9

Negotiable instruments under the UCC do not include:

Accepted Answer

While cash is a type of financial instrument, it is not considered a negotiable instrument under the UCC. The other options listed, including notes, certificates of deposit, and promissory notes, are all negotiable instruments subject to the UCC.

Question 10

If an instrument is found to be negotiable under the UCC,it may be freely traded without concern for any existing contract responsibilities if the instrument is in the possession of a holder in due course.To be a holder in due course,one must:

Accepted Answer

To be a holder in due course, one must give value for the instrument, accept it without knowledge of any defects (for example, that it is overdue), and take the instrument in good faith.

Question 11

If an instrument is determined to be nonnegotiable,and a dispute arises,Article 3 will:

Accepted Answer

Article 3 of the Uniform Commercial Code (UCC) applies specifically to negotiable instruments. If an instrument is determined to be nonnegotiable, the provisions of Article 3 concerning negotiability, transfer, and the rights of holders in due course, among others, do not apply. The resolution of disputes involving nonnegotiable instruments would not be governed by Article 3 but rather by other relevant laws or articles of the UCC, depending on the nature of the instrument and the dispute.

Question 12

Besides being written,an unconditional order or promise to pay,must be made out for a definite sum of money.To be negotiable under Article 3 of the UCC,an instrument also must meet which of the following requirements it:

Accepted Answer

To be negotiable under Article 3 of the UCC, an instrument must meet three requirements: it must be a written unconditional promise or order to pay, it must be payable on demand or at a specified time period, and it must be signed by the maker or the drawer. In addition, the instrument must be made out "to order" or "to bearer" to be negotiable. Therefore, the best choice is E, as it includes all four requirements.

Question 13

TP sells franchises in the Old Fast Food chain.TP sells a franchise to Choi for $100,000 by cashier's check.Choi then hears that TP is going out of business and tries to stop payment on the check.TP has already transferred the money to a third party who meets the UCC's requirements for a holder in due course.The bank paid that third party.TP declares it is out of business.In a subsequent lawsuit:

Accepted Answer

The answer of TP sells franchises in the Old Fast...

Question 14

To be found a holder in due course,a transferee must:

Accepted Answer

The answer of To be found a holder in due...

Question 15

Which of the following requirements is necessary to be a holder in due course:

Accepted Answer

All of the other specific choices are necessary to be a holder in due course. The transferee must give value for the negotiable instrument, take the instrument without knowledge that it is overdue or defective, and take the instrument in good faith. These requirements are outlined in the Uniform Commercial Code.

Question 16

Negotiable instruments do not include:

Accepted Answer

All of the given choices are negotiable instruments.

Question 17

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

Accepted Answer

The answer of If a negotiable instrument is transferred by...

Question 18

If an instrument is determined to be nonnegotiable,and a dispute arises,Article 3 will:

Accepted Answer

Article 3 of the Uniform Commercial Code specifically applies to negotiable instruments, meaning that if an instrument is determined to be nonnegotiable, Article 3 would not apply. In such a case, the parties would need to resolve their dispute with reference to the common law of contracts.

Question 19

If a negotiable instrument is assigned,the assignee has:

Accepted Answer

The answer of If a negotiable instrument is assigned,the assignee...

Question 20

If an instrument is found to be negotiable under the UCC,it may be freely traded without concern for any existing contract responsibilities if the instrument is in the possession of a holder in due course.To be a holder in due course,one must:

Accepted Answer

The correct answer is E because none of the other choices accurately describe the requirements for being a holder in due course under the UCC. A holder in due course must take the instrument for value, in good faith, and without notice of any defect in the instrument or claim against it. None of the provided choices accurately reflect these requirements.

Quiz 12: Negotiable Instruments, credit, and Bankruptcy

Which of the following requirements is necessary to be a holder in due course:

To be found a holder in due course,a transferee must:

If a negotiable instrument is assigned,the assignee has:

Payment practices vary around the world.Islamic law is interpreted by many Muslims to mean that interest payments are prohibited by the Koran.In practice,this means that in countries that practice Islamic law:

The one who agreed to make a payment,such as a bank making a payment based on a document presented to it is:

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

Which of the following requirements is necessary to be a holder in due course:

Negotiable instruments under the UCC do not include:

If an instrument is found to be negotiable under the UCC,it may be freely traded without concern for any existing contract responsibilities if the instrument is in the possession of a holder in due course.To be a holder in due course,one must:

If an instrument is determined to be nonnegotiable,and a dispute arises,Article 3 will:

Besides being written,an unconditional order or promise to pay,must be made out for a definite sum of money.To be negotiable under Article 3 of the UCC,an instrument also must meet which of the following requirements it:

To be found a holder in due course,a transferee must:

Which of the following requirements is necessary to be a holder in due course:

Negotiable instruments do not include:

If a negotiable instrument is transferred by negotiation,the transferee takes the instrument:

If an instrument is determined to be nonnegotiable,and a dispute arises,Article 3 will:

If a negotiable instrument is assigned,the assignee has:

If an instrument is found to be negotiable under the UCC,it may be freely traded without concern for any existing contract responsibilities if the instrument is in the possession of a holder in due course.To be a holder in due course,one must: