Question 1

Which of the following was the result on appeal in Laborer's Pension Fund v. A & C Envtl. Inc., the case in the text in which the defending employer claimed that an agreement entered into regarding payment of union dues wrongfully required payment for all defendant's employees when it should have required payment of dues for only a few employees who were working out- of-town within the area of the union involved?

Accepted Answer

A)   That the defending employer had to pay no dues at all because a representative of the plaintiff wrongfully misrepresented the contents of the written document.
B)   That the defending employer had to pay only the dues of the employees who were working out-of-town within the area of the union involved because a representative of the plaintiff wrongfully misrepresented the contents of the written document.
C)   That although a representative of the plaintiff misinformed the defending employer of the contents of the written document, the defendant's representative had sufficient opportunity to read the document; and the defending employer was therefore liable for dues of all its employees.
D)   That the defending employer was liable for all the dues regardless of whether a representative of the plaintiff misinformed the defending employer of the contents of the written document and regardless of whether the defendant's representative had an opportunity to read it.
E)   That while the defending employer would be liable for all dues under common law, because of applicable federal labor law, the defending employer was liable for dues only for employees working out-of-town within the area of the union involved.F) All of the above
G) C) and D)

Question 2

Barry wrote a check drawn on his account at ABC Bank for $500 made out to Susie Smith for payment for yard work. Barry put the check properly addressed to Susie in the U.S. mail. Through unknown means, a thief obtained the check. The thief altered the name of the payee to Trudy Smith, and through expertly forged documents opened an account at XYZ Bank and obtained the funds from Barry's check along with a number of other stolen checks. When the check was then presented to ABC Bank for payment, ABC Bank charged Barry's account in the amount of $500. A few days later, Susie asked Barry for her money; and, after investigating, he became aware of the situation. Assuming the court follows the reasoning of the case in the text, Halliburton Energy Services Inc., v. Fleet National Bank, which of the following is true regarding whether Barry is entitled to a return of his funds?

Accepted Answer

A)   As a matter of law, the presenting bank is charged with notice of forgeries; therefore, XYZ must take the loss, and Barry is entitled to a return of his funds.
B)   That Susie, the payee, bore a risk of loss and that, although Barry is not entitled to return of the funds, his debt to Susie is discharged.
C)   That Barry is entitled to a return of only ½ of the funds because in such cases, the collecting bank, XYZ Bank, and the drawer, Barry, must share the loss.
D)   That Barry is entitled to a return of the funds only if he can establish that he notified ABC Bank of the problem within 30 days of receiving the bank statement showing the alteration.
E)   That Barry is entitled to a refund only if he can establish that XYZ Bank failed to exercise ordinary care in taking the instrument.F) A) and B)
G) A) and D)

Question 3

"Hot Dress." Doreen writes a check for a dress to Hot Dresses Inc., a small specialty shop whose shares are owned primarily by Betty. Betty decided to go on an extended European vacation and temporarily closed down the shop the day after Doreen wrote the check. When Betty returned, she had a number of other things to do and did not take Doreen's check and some other checks to the bank for three months. Betty was independently wealthy and only ran the shop as a hobby, so she had not been in need of funds. When Betty finally took Doreen's check to the bank, Betty requested that her bank, ABC Bank, deposit the check into her account. When ABC Bank, however, requested payment from Doreen's bank, XYZ Bank, the check was dishonored because of insufficient funds in Doreen's account. Although Betty did not particularly need the funds, she did not like to feel as if she had been cheated; therefore, she demanded that Doreen make the check good.
-Who is the drawee of the check Doreen presented to Hot Dresses Inc.,?

Accepted Answer

A)   Doreen
B)   Hot Dresses Inc.
C)   Betty, as primary owner of Hot Dresses Inc.
D)   Doreen's bank
E)   Betty's bankF) None of the above
G) A) and C)

Question 4

When a party's liability for a negotiable instrument is terminated, this party's liability has been ____.

Accepted Answer

A)   Terminated
B)   Released
C)   Discharged
D)   Abrogated
E)   DeliveredF) B) and E)
G) B) and D)

Question 5

Which of the following is a party who has authority to act on behalf of and bind another party?

Accepted Answer

A)   An agent
B)   A principal
C)   A warrantor
D)   A transferor
E)   A real endorserF) B) and D)
G) B) and C)

Question 6

A[n] ______ party signs an instrument to provide credit for another party that has also signed the instrument.

Accepted Answer

A)   Agreeable
B)   Accommodation
C)   Agent
D)   Principle
E)   PromisorF) A) and B)
G) A) and E)

Question 7

Effie received a check written by Sam whom she did not really trust. Accordingly, she rushed to his bank to get the check cashed. The bank told her that presentment would be considered as being made on the next business day and refused to immediately give her the funds. The bank representative told her that the bank's cut-off hour was 2:00 p.m. and that she did not present the check until 3:00 p.m. Effie was upset and told the bank that it wrongfully dishonored the check in violation of provisions of the UCC. Discuss the rights of the parties.

Accepted Answer

A bank to which presentment is made may ...

Question 8

Which of the following was the result on appeal in Heartland State Bank v. American Bank & Trust, the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Accepted Answer

A)   That the defending bank had no right to return the check because the check had already gone through the Federal Reserve System.
B)   That the defending bank had no right to return the check because by accepting the check, it became accountable for it.
C)   That the bank had no right to return the check because the check was written by one of its customers.
D)   That the defending bank had until midnight on April 10 in which to return the check and that it, therefore, did not act in a timely manner.
E)   That the defending bank had until midnight on April 11 in which to return the check and that it, therefore, acted in a timely manner in doing so.F) A) and B)
G) B) and D)

Question 9

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Accepted Answer

A)   A party who has transfer liability.
B)   A party who has acceptor liability.
C)   A party who has maker liability.
D)   A party who has secondary liability.
E)   A party who has recognition liability.F) All of the above
G) B) and C)

Question 10

According to the UCC, a signature can be any name, word, mark, or symbol used by a party to authenticate a writing.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is true in the event an instrument contains more than one endorsement?

Accepted Answer

A)   Each endorser is liable for the full amount to the subsequent endorser or to the holder.
B)   Only the last endorser is liable to the holder and no prior endorsers are liable to a subsequent endorser.
C)   Each endorser is liable for the full amount to the subsequent endorser, but only the last endorser is liable to any holder.
D)   The last endorser is liable to the holder, whereas subsequent endorsers are not liable to the holder, but are responsible for reimbursing the last endorser in proportion to the number of endorsers that exist.
E)   Each endorser is liable to the holder in proportion to the number of endorsers that exist.F) None of the above
G) C) and D)

Question 12

Which of the following must occur for a drawer to become liable on a check?

Accepted Answer

A)   The only requirement is that the holder of the instrument present the instrument to the drawer in a proper and timely fashion.
B)   The only requirement is that the holder of the instrument present the instrument to the drawee in a proper and timely fashion.
C)   The two requirements are that (1)  the holder of the instrument present the instrument to the drawer in a proper and timely fashion and (2)  the holder establish that the check was wrongfully dishonored.
D)   The three requirements are that (1)  the holder of the instrument present the instrument to the drawee in a proper and timely fashion, (2)  the instrument be dishonored, and (3)  notice of the dishonor be given to the drawer.
E)   The four requirements are that (1)  the holder of the instrument present the instrument to the drawee in a proper and timely fashion, (2)  the instrument be dishonored, (3)  notice of the dishonor be given to the drawer, and (4)  proof provided by the holder that the check was wrongfully dishonored.F) All of the above
G) A) and E)

Question 13

Which of the following was the result on appeal in the Case Opener in which the plaintiff optometrist sued the defending bank for cashing over 500 checks that his receptionist fraudulently embezzled through forging his signature?

Accepted Answer

A)   Because both the plaintiff and the bank were found negligent, the plaintiff was denied recovery.
B)   Because only the bank was found negligent, the plaintiff was denied recovery.
C)   Because both the plaintiff and the bank were found negligent, the plaintiff recovered only 50% of his losses.
D)   Because only the bank was found negligent, the plaintiff was entitled to recover the value of the checks.
E)   Based on public policy, the plaintiff was denied recovery although no negligence was found on the part of either party.F) C) and D)
G) All of the above

Question 14

Which of the following is true regarding liability on negotiable instruments?

Accepted Answer

A)   Issuers and acceptors are primarily liable for a negotiable instrument, while drawers and endorsers are secondarily liable.
B)   Drawers and endorsers are primarily liable, while issuers and acceptors are secondarily liable.
C)   Issuers and drawers are primarily liable, while acceptors and endorsers are secondarily liable.
D)   Acceptors and endorsers are primarily liable, while issuers and drawers are secondarily liable.
E)   Drawers are primarily liable, while issuers, acceptors, and endorsers are secondarily liable.F) All of the above
G) B) and E)

Question 15

The type of liability that occurs based on a person signing a negotiable instrument is referred to as which of the following?

Accepted Answer

A)   Warranty liability
B)   Payee liability
C)   Signature liability
D)   Primary liability
E)   Secondary liabilityF) None of the above
G) B) and C)

Question 16

Which of the following promises to pay a set sum to the holder of a promissory note or certificate of deposit?

Accepted Answer

A)   Maker
B)   Acceptor
C)   Drawer
D)   Endorser
E)   PromisorF) B) and E)
G) C) and D)

Question 17

If a transfer is through endorsement, transfer warranties apply to any future holders; however, if the transfer does not occur through endorsement, the warranties apply only to the transferee.

Accepted Answer

A) True 
 B)False

Question 18

The fact that a bank refuses to pay an instrument means that it has been dishonored.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account, but the principal does nothing until two months later after the agent leaves town with the funds?

Accepted Answer

A)   Because the checks were forged, the principal can receive reimbursement of the funds from any maker involved or any bank that cashed the checks.
B)   The principal can receive reimbursement from makers of the checks only.
C)   The principal can receive reimbursement from any bank that cashed the checks only.
D)   It is likely that it will be determined that the principal ratified the signatures and that the principal cannot recover from either makers or banks that cashed the checks.
E)   The principal can recover from either the makers or any banks who cashed the checks only if it can be shown that the agent cannot be located for criminal prosecution.F) B) and C)
G) C) and D)

Question 20

In order for the principal to be held liable when an agent signs a note on behalf of the principal, the principal's name must be shown on the instrument.

Accepted Answer

A) True 
 B)False

Exam 28: Liability, Defenses, and Discharge

Which of the following promises to pay a set sum to the holder of a promissory note or certificate of deposit?

Correct Answer
verified

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Correct Answer
verified

The type of liability that occurs based on a person signing a negotiable instrument is referred to as which of the following?

Correct Answer
verified

Which of the following was the result on appeal in the Case Opener in which the plaintiff optometrist sued the defending bank for cashing over 500 checks that his receptionist fraudulently embezzled through forging his signature?

Correct Answer
verified

Which of the following must occur for a drawer to become liable on a check?

Correct Answer
verified

According to the UCC, a signature can be any name, word, mark, or symbol used by a party to authenticate a writing.

Correct Answer
verified

In order for the principal to be held liable when an agent signs a note on behalf of the principal, the principal's name must be shown on the instrument.

Correct Answer
verified

Which of the following is a party who has authority to act on behalf of and bind another party?

Correct Answer
verified

When a party's liability for a negotiable instrument is terminated, this party's liability has been ____.

Correct Answer
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Which of the following is true regarding liability on negotiable instruments?

Correct Answer
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Correct Answer
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Which of the following was the result on appeal in Heartland State Bank v. American Bank & Trust, the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Correct Answer
verified

Correct Answer
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A bank to which presentment is made may ...
View Answer

A[n] ______ party signs an instrument to provide credit for another party that has also signed the instrument.

Correct Answer
verified

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account, but the principal does nothing until two months later after the agent leaves town with the funds?

Correct Answer
verified

The fact that a bank refuses to pay an instrument means that it has been dishonored.

Correct Answer
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Which of the following is true in the event an instrument contains more than one endorsement?

Correct Answer
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Correct Answer
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Correct Answer
verified

If a transfer is through endorsement, transfer warranties apply to any future holders; however, if the transfer does not occur through endorsement, the warranties apply only to the transferee.

Correct Answer
verified

Exam 28: Liability, Defenses, and Discharge

Which of the following promises to pay a set sum to the holder of a promissory note or certificate of deposit?

Correct AnswerverifiedShow Answer

Which of the following type of liability establishes that the party must pay the amount due on the instrument if the primarily liable party defaults?

Correct AnswerverifiedShow Answer

The type of liability that occurs based on a person signing a negotiable instrument is referred to as which of the following?

Correct AnswerverifiedShow Answer

Which of the following was the result on appeal in the Case Opener in which the plaintiff optometrist sued the defending bank for cashing over 500 checks that his receptionist fraudulently embezzled through forging his signature?

Correct AnswerverifiedShow Answer

Which of the following must occur for a drawer to become liable on a check?

Correct AnswerverifiedShow Answer

According to the UCC, a signature can be any name, word, mark, or symbol used by a party to authenticate a writing.

Correct AnswerverifiedShow Answer

In order for the principal to be held liable when an agent signs a note on behalf of the principal, the principal's name must be shown on the instrument.

Correct AnswerverifiedShow Answer

Which of the following is a party who has authority to act on behalf of and bind another party?

Correct AnswerverifiedShow Answer

When a party's liability for a negotiable instrument is terminated, this party's liability has been ____.

Correct AnswerverifiedShow Answer

Which of the following is true regarding liability on negotiable instruments?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following was the result on appeal in Heartland State Bank v. American Bank & Trust, the case in the text involving whether the defending payor bank timely sent notice of dishonor of a check when it sent notice before midnight on April 11 for a check received on April 10?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA bank to which presentment is made may ...View AnswerShow Answer

A[n] ______ party signs an instrument to provide credit for another party that has also signed the instrument.

Correct AnswerverifiedShow Answer

Which of the following is the most likely result if an agent admits to the principal that a check for the principal was forged by the agent and placed into the agent's bank account, but the principal does nothing until two months later after the agent leaves town with the funds?

Correct AnswerverifiedShow Answer

The fact that a bank refuses to pay an instrument means that it has been dishonored.

Correct AnswerverifiedShow Answer

Which of the following is true in the event an instrument contains more than one endorsement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If a transfer is through endorsement, transfer warranties apply to any future holders; however, if the transfer does not occur through endorsement, the warranties apply only to the transferee.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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A bank to which presentment is made may ...
View Answer

Correct Answer
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