Question 1

A consumer note arises when

Accepted Answer

B

Question 2

Does a bill of exchange have to be written?

Accepted Answer

According to the Bills of Exchange Act, a bill of exchange must be in writing and signed by the drawer. Therefore, the correct answer is E.

Question 3

Where a bill of exchange is used in a purchase and sale transaction for goods sold on credit terms,the bill is "accepted" by the

Accepted Answer

The buyer is the acceptor of the bill of exchange as they are agreeing to pay the amount stated on the bill at a future date. The seller may draw up the bill and present it to the buyer for acceptance, but ultimately it is the buyer who accepts the obligation to pay. The banks may be involved in the transaction, but they are not the ones who accept the bill.

Question 4

Which is a true statement?

Accepted Answer

The answer of Which is a true statement?
...

Question 5

Once a bill is drawn it is sent to the ___________ for ___________.Before the date for payment it may be negotiated to others,called _______________ by way of ___________.

Accepted Answer

Once a bill is drawn, it is sent to the drawee for acceptance. Before the due date for payment, it may be negotiated to others, called holders, by way of endorsement. Therefore, option D is the correct choice as it correctly identifies the drawee, acceptance, holders, and endorsement in the given context.

Question 6

Magda purchased some new clothes at a clothing store,and gave the sales clerk a cheque for the price of the goods as payment.If the clothing shop owner took Magda's cheque to the bank,and had it certified,Magda's debt to the seller would be extinguished.

Accepted Answer

When a cheque is certified by the bank, it guarantees that there are sufficient funds to cover the amount of the cheque. Once the cheque is certified, the seller can deposit it and receive the funds, effectively extinguishing the debt.

Question 7

Law relating to certified cheques in Canada are found in

Accepted Answer

The answer of Law relating to certified cheques in Canada...

Question 8

Which of the following are not negotiable instruments?

Accepted Answer

A bill of sale is not a negotiable instrument because it is a document that evidences the transfer of ownership of goods from one person to another and does not contain an unconditional promise or order to pay a specific amount of money, unlike cheques, certified cheques, cheques made payable to a fictitious entity like "Mickey Mouse," and promissory notes, which are all considered negotiable instruments.

Question 9

Brendan prepared a cheque payable to Joey,and placed it in the pocket of his coat.Later in the day,while shopping,his coat was stolen.Brendan may contact the bank upon which the cheque was drawn,and countermand payment of the cheque.The bank must thereafter refuse payment of the cheque if it should be presented for payment.

Accepted Answer

Brendan can contact the bank to countermand payment of the cheque, as it was stolen. The bank must then refuse payment if the cheque is presented for payment.

Question 10

A certified cheque is

Accepted Answer

The answer of A certified cheque is
...

Question 11

Bill writes Nick a cheque for $500 on his account at the Friendly Bank.Bill is the _______ and Nick is the __________ and the Friendly Bank is the ______________.

Accepted Answer

In a check, the person who writes the check is known as the drawer, the person to whom the check is payable is known as the payee and the bank on which the check is drawn is known as the drawee. Therefore, in this scenario, Bill (who writes the check) is the drawer, Nick (who receives the check) is the payee, and the Friendly Bank (where Bill has an account from which he writes the check) is the drawee.

Question 12

Magda purchased some new clothes at a clothing store,and gave the sales clerk a cheque for the price of the goods as payment.If Magda had presented a certified cheque as payment,the acceptance of the cheque would extinguish the debt.

Accepted Answer

The answer of Magda purchased some new clothes at a...

Question 13

Magda purchased some new clothes at a clothing store,and gave the sales clerk a cheque for the price of the goods as payment.The cheque is only conditional payment,and remains so until the cheque is honoured by Magda's bank.

Accepted Answer

A cheque is not considered actual payment until it has been cleared by the bank it is drawn on. This process can take a few days, during which time the cheque is considered conditional payment.

Question 14

The most superior position in which parties to a negotiable instrument can find themselves is a(n)

Accepted Answer

The most superior position in which parties to a negotiable instrument can find themselves is a holder in due course. A holder in due course is a person who takes a negotiable instrument for value, in good faith, and without notice of any defects or claims against the instrument. A holder in due course has special legal rights and protections, and is not subject to certain defenses that might be available against other holders.

Question 15

The legislation creating promissory notes is found in which statute?

Accepted Answer

The Bills of Exchange Act contains the legislation governing promissory notes, as well as other negotiable instruments such as bills of exchange and cheques.

Question 16

Erin writes Lorie a promissory note for $500.Erin is the _________ and Lorie is the ________.

Accepted Answer

In the context of a promissory note, the person who creates the note and promises to pay is known as the "maker," and the person to whom the note is payable is referred to as the "bearer" if the note is payable to bearer or "payee" if it is payable to a specific person. Since the options do not include "payee," the correct terminology in this context is "maker" for Erin and "bearer" for Lorie.

Question 17

Magda purchased some new clothes at a clothing store,and gave the sales clerk a cheque for the price of the goods as payment.The acceptance of the cheque by the sales clerk constitutes payment of the debt in full.

Accepted Answer

While the acceptance of a cheque may be considered as a form of payment, it does not necessarily constitute payment in full unless that agreement was explicitly made between the buyer and the seller beforehand. The cheque may also bounce or be declined, which would void the payment.

Question 18

Where a cheque is made payable to Lucien Colbert,and on its reverse are written the words "For deposit only to the credit of L.Colbert,"

Accepted Answer

The endorsement "For deposit only to the credit of L. Colbert" is a restrictive endorsement because it restricts the manner in which the cheque can be used, specifically limiting it to deposit into the account of L. Colbert.

Question 19

Who can the holder of a bill of exchange sue if it is dishonoured?

Accepted Answer

The holder of a bill of exchange can sue the drawer, acceptor, and any endorsers if the bill is dishonoured. This is because all these parties have, in various ways, guaranteed the payment of the bill, and thus, the holder has recourse against all of them.

Question 20

A paper reads: To: Empire Bank.Five days after the next full moon,pay to Nathan Montrose or anyone named by him the sum of $500.Signed: "Monica Traymoor," August 15,2007.Most correctly,this is

Accepted Answer

The answer of A paper reads: To: Empire Bank.Five days...

Quiz 28: Law of Negotiable Instruments