Ch26-TB2-WBL-10e - Chapter26...

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Chapter 26 Liability, Defenses, and Discharge 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. A person is not liable on a negotiable instrument unless he or she, or his or  her authorized agent, signs it. ANSWER: T PAGE: 515 TYPE: = 2. If an instrument is incomplete when the maker signs it, the maker’s ob- ligation is to pay it to an HDC according to the incomplete terms. ANSWER: F PAGE: 516 TYPE: + 3. An acceptor is secondarily liable to all subsequent holders of an instrument. ANSWER: F PAGE: 516 TYPE: N 4. A drawer is primarily liable on an instrument. ANSWER: F PAGE: 516 TYPE: + 5. Presentment of a negotiable instrument may be properly made, depending  on the type of instrument, by any commercially reasonable means. 5
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6 TEST BANK 2—UNIT FIVE: NEGOTIABLE INSTRUMENTS ANSWER: T PAGE: 517 TYPE: =
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CHAPTER 26: LIABILITY, DEFENSES, AND DISCHARGE 7 6. An instrument is dishonored when its  acceptance  is refused. ANSWER: T PAGE: 517 TYPE: = 7. An instrument is dishonored when its  payment  is refused. ANSWER: T PAGE: 517 TYPE: = 8. An accommodation party that pays an instrument has a right of recourse  against the party accommodated. ANSWER: T PAGE: 520 TYPE: = 9. An authorized agent may be personally liable on an instrument if the agent  does not sign his or her own name. ANSWER: F PAGE: 521  TYPE: = 10. An unauthorized signature never binds the person whose name is forged. ANSWER: F PAGE: 522 TYPE: + 11. When an instrument has a forged indorsement, the loss usually falls on the  first party to take the instrument. ANSWER: T PAGE: 522   TYPE: = 12. Warranty liability does not bind parties who only present instruments for  payment. ANSWER: F PAGE: 524 TYPE: + 13. The drawer of a check cannot enforce all of the presentment warranties. ANSWER: T PAGE: 525 TYPE: N 14. Universal defenses defeat the claims of HDCs. ANSWER: T PAGE: 526 TYPE: + 15. A person whose name is forged on an instrument cannot avoid payment on  the instrument to an HDC.
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8 TEST BANK 2—UNIT FIVE: NEGOTIABLE INSTRUMENTS ANSWER: F PAGE: 526 TYPE: N 16. The completion of an originally incomplete instrument in an unauthorized  manner is a defense against payment on the instrument to an HDC. ANSWER: F PAGE: 526 TYPE: = 17. A breach of a contract for which an instrument was issued will defeat the  claim of an ordinary holder for payment on the instrument.
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