Ch25-TB1-WBL-10e

Ch25-TB1-WBL-10e - Chapter25 Transferabilityand...

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Chapter 25 Transferability and  Holder in Due Course N.B.:   TYPE  indicates that a question is new, modified, or unchanged, as  follows. N A question  new  to this edition of the Test Bank. + A question  modified  from the previous edition of the Test Bank, = A question  included  in the previous edition of the Test Bank. TRUE/FALSE QUESTIONS 1. An instrument “payable to bearer” is transferable by assignment or by  negotiation. ANSWER: T PAGE: 495 TYPE: N 2. A bearer instrument is negotiated by delivery alone. ANSWER: T PAGE: 495 TYPE: N 3. An order instrument is negotiated by delivery alone. ANSWER: F PAGE: 495 TYPE: N 4. A holder in due course (HDC) cannot acquire more rights in an instrument  than its transferor held. ANSWER: F PAGE: 495 TYPE: = 249
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250 TEST BANK 1—UNIT FIVE: NEGOTIABLE INSTRUMENTS 5. The party that holds an instrument “payable to bearer” is entitled to pre- sent the instrument for payment or to transfer it to another party. ANSWER: T PAGE: 495 TYPE: N 6. An indorsement is required to negotiate an order instrument. ANSWER: T PAGE: 495 TYPE: = 7. A blank indorsement can consist of a mere signature. ANSWER: T PAGE: 496 TYPE: = 8. A restrictive indorsement requires an indorsee to comply with certain in- structions regarding the funds involved. ANSWER: T PAGE: 497 TYPE: = 9. An instrument payable to two persons jointly requires the indorsement of  only one of the payees for negotiation. ANSWER: F PAGE: 500 TYPE: = 10. A person who receives an instrument as a gift normally possesses the rights  of an HDC. ANSWER: F PAGE: 503 TYPE: = 11. A promise to give value in the future is normally sufficient to confer the  rights of an HDC on one in possession of a negotiable instrument. ANSWER: F PAGE: 503 TYPE: = 12. A holder takes an instrument for value if he or she gives a check as pay- ment for it. ANSWER: T PAGE: 504 TYPE: = 13. Good faith, for purposes of UCC Article 3, is “honesty in fact and the ob- servance of reasonable commercial standards of fair dealing.” ANSWER: T PAGE: 504 TYPE: =
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CHAPTER 25: TRANSFERABILITY AND HOLDER IN DUE COURSE 251 14. For an ordinary holder to become an HDC, the person from whom the  holder acquired a negotiable instrument must have acted in good faith. ANSWER: F PAGE: 504 TYPE: = 15. Acquiring a negotiable instrument after its maturity date may prevent a  holder from becoming an HDC. ANSWER: T PAGE: 506 TYPE: N
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252 TEST BANK 1—UNIT FIVE: NEGOTIABLE INSTRUMENTS 16. If a note is payable on a legal holiday, then the payment of the note will be  due on the next business day. ANSWER:
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Ch25-TB1-WBL-10e - Chapter25 Transferabilityand...

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