Question 1

Which of the following is a condition for liability in general?

Accepted Answer

A)   Presentment waived
B)   Unaccepted draft
C)   Notice of dishonor excused
D)   Warranty liability
E)   Transfer of warrantyF) B) and D)
G) A) and C)

Question 2

Conversion is the civil equivalent of theft.

Accepted Answer

A) True 
 B)False

Question 3

According to the Uniform Commercial Code, _____ occurs when a person entitled to enforce the instrument (creditor)  demands payment from the maker.

Accepted Answer

A)   acceptance
B)   conversion
C)   presentment
D)   dishonor
E)   dischargeF) None of the above
G) B) and E)

Question 4

Presentment cannot be excused even if the maker or executor is dead.

Accepted Answer

A) True 
 B)False

Question 5

For an indorser, the condition for liability in general is notice of dishonor excused.

Accepted Answer

A) True 
 B)False

Question 6

There are some deadlines for giving notice: on an instrument taken for collection:

Accepted Answer

A)   a nonbank must give notice before midnight on the next banking day following the day on which it receives notice of dishonor.
B)   a bank must give notice within thirty days after the day it received notice.
C)   in all situations, the deadline is ninety days after the day dishonor occurred.
D)   a specific form of notice is required to be given in written communication.
E)   may be given by any commercially reasonable means including a written, or electronic communication, but excluding all oral communication.F) C) and D)
G) A) and E)

Question 7

Under _____, the holder may discharge any party, even without consideration, by marking the face of the instrument or the indorsement in an unequivocal way.

Accepted Answer

A)   discharge by payment
B)   discharge by tender
C)   discharge by cancellation and renunciation
D)   material and fraudulent alteration
E)   discharge of indorsers and accommodation partiesF) A) and E)
G) A) and B)

Question 8

Unlike primary liability, secondary liability is conditional, arising only if the primarily liable party fails to pay.

Accepted Answer

A) True 
 B)False

Question 9

Authorized signatures are not binding if negligence contributed to an instrument's alteration or forgery,

Accepted Answer

A) True 
 B)False

Question 10

Liability can also arise by warranty.

Accepted Answer

A) True 
 B)False

Question 11

One of the transfer warranties is that all signatures on the instrument are authentic and authorized.

Accepted Answer

A) True 
 B)False

Question 12

An accommodation maker is not primarily liable on a note.

Accepted Answer

A) True 
 B)False

Question 13

According to the Uniform Commercial Code, a signature must be signed; it cannot be made by means of a device or machine.

Accepted Answer

A) True 
 B)False

Question 14

A person acting (or purporting to act)  as an agent who signs an instrument:

Accepted Answer

A)   is liable if he signs his name without indicating agency status but the check has the principal's identification on it.
B)   is not required to be the authorized signature of the principal.
C)   is liable if he signs his own name and makes clear he is doing so as an agent.
D)   binds the principal to the same extent as the principal would be bound if the signature were on a simple contract.
E)   is not liable when he signs incorrectly.F) A) and E)
G) D) and E)

Question 15

When acceptance or payment is refused after presentment, the instrument is said to be dishonored.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a warranty made one who presents an unaccepted draft?

Accepted Answer

A)   The transferor is not entitled to enforce the instrument.
B)   All signatures on the instrument are not authentic or authorized.
C)   The instrument has been altered.
D)   Entitled to enforce the draft or to obtain payment or acceptance.
E)   The presenter has knowledge that the signature of the drawer is unauthorized.F) A) and E)
G) B) and E)

Question 17

For an unaccepted draft, the drawer's liability is conditioned on presentment.

Accepted Answer

A) True 
 B)False

Question 18

A drawee bank that pays over a forged indorsement is not liable for conversion.

Accepted Answer

A) True 
 B)False

Question 19

_____ generally means failure by the obligor to pay on the instrument when presentment for payment is made.

Accepted Answer

A)   Conversion
B)   Dishonor
C)   Bankruptcy
D)   Forgery
E)   PresentmentF) B) and E)
G) A) and E)

Question 20

The facts are the same as above, but you are to assume that the bank discovered the forgery before returning the check to Apple and therefore credited his account. Can the bank in turn collect from Dubious the $1,500 paid to Dubious?

Accepted Answer

No, the bank cannot collect from Dubious...

Exam 25: Liability and Discharge

A drawee bank that pays over a forged indorsement is not liable for conversion.

Correct AnswerverifiedShow Answer

For an unaccepted draft, the drawer's liability is conditioned on presentment.

Correct AnswerverifiedShow Answer

Conversion is the civil equivalent of theft.

Correct AnswerverifiedShow Answer

Which of the following is a condition for liability in general?

Correct AnswerverifiedShow Answer

One of the transfer warranties is that all signatures on the instrument are authentic and authorized.

Correct AnswerverifiedShow Answer

The facts are the same as above, but you are to assume that the bank discovered the forgery before returning the check to Apple and therefore credited his account. Can the bank in turn collect from Dubious the $1,500 paid to Dubious?

Correct AnswerverifiedNo, the bank cannot collect from Dubious...View AnswerShow Answer

Authorized signatures are not binding if negligence contributed to an instrument's alteration or forgery,

Correct AnswerverifiedShow Answer

Under _____, the holder may discharge any party, even without consideration, by marking the face of the instrument or the indorsement in an unequivocal way.

Correct AnswerverifiedShow Answer

According to the Uniform Commercial Code, a signature must be signed; it cannot be made by means of a device or machine.

Correct AnswerverifiedShow Answer

A person acting (or purporting to act) as an agent who signs an instrument:

Correct AnswerverifiedShow Answer

For an indorser, the condition for liability in general is notice of dishonor excused.

Correct AnswerverifiedShow Answer

Unlike primary liability, secondary liability is conditional, arising only if the primarily liable party fails to pay.

Correct AnswerverifiedShow Answer

Liability can also arise by warranty.

Correct AnswerverifiedShow Answer

Which of the following is a warranty made one who presents an unaccepted draft?

Correct AnswerverifiedShow Answer

An accommodation maker is not primarily liable on a note.

Correct AnswerverifiedShow Answer

When acceptance or payment is refused after presentment, the instrument is said to be dishonored.

Correct AnswerverifiedShow Answer

According to the Uniform Commercial Code, _____ occurs when a person entitled to enforce the instrument (creditor) demands payment from the maker.

Correct AnswerverifiedShow Answer

There are some deadlines for giving notice: on an instrument taken for collection:

Correct AnswerverifiedShow Answer

Presentment cannot be excused even if the maker or executor is dead.

Correct AnswerverifiedShow Answer

_____ generally means failure by the obligor to pay on the instrument when presentment for payment is made.

Correct AnswerverifiedShow Answer

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No, the bank cannot collect from Dubious...
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