Practice test 1

Practice test 1 - 1. John writes a check to Kay as payment...

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1. John writes a check to Kay as payment for a CD player but soon discovers the player is broken. He goes to the drawee bank and orally authorizes Larry, a bank officer, to stop payment on the check. This order is valid for a. Fourteen days. b. Fourteen months. c. Six days. d. Six months. 2. Opal asks Paolo, who does not understand English, to sign what Opal says is an application to open a bank account. In fact, the “application” is a note. If sued on the note by and HDC, Paolo’s best defense would be a. Extreme duress. b. Fraud in the execution. c. Fraud in the inducement. d. Mistake. 3. Marie acquires a check drawn on Northern State Bank. To present the check for payment, she may use any commercially reasonable a. Electronic or written means of communication only. b. Oral or written means of communication only. c. Electronic, oral, or written means of communication. d. Written means of communication only. 4. A+ Auto Rentals owes Apex Auto Dealership $2,000. A+ executes a note to Apex as security for the debt. This security a. Does not constitute sufficient consideration for HDC status. b. Does not satisfy the value requirement for HDC statues. c. Satisfies the consideration requirement tor HDC statues. d. Satisfies the value requirement for HDC status. 5. Jay holds himself out as possessing special accounting skills. As an agent, he must exercise the degree of skill or care expected of a. A person having those skills. b. An average, unskilled person. c. A reasonable person. d. The principal. 6. Paula owes $8,000 in unpaid taxes. Using the back of an old shirt, she executes an instrument for $8,000 that otherwise meets the requirements for negotiability. This instrument is likely a. Negotiable. b. Nonnegotiable, because a shirt is not sufficiently permanent. c. Nonnegotiable, because the government does not appreciate such gestures.
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d. Nonnegotiable, because an instrument must be on paper so that it may be processed efficiently in the banking system. 7. On May 1, Ace Personnel, Inc., issues a payroll check to Barb drawn on its account at City Bank. On June 1, Ace receives its bank statement. On June 20, Barb indorses the check and cashes it at Downtown Finance Corporation. On July 1, Downtown transfers the check to EZ Collection Agency. On December 1, EZ presents the check to First National for payment. A stale check is one that is presented for payment a. Six months after issue. b. Six months after the first indorsement. c. Six weeks after issue. d. Six weeks after the last statement. 8. Ken writes a check for $500 drawn on City Bank and presents it to Lynn. When Lynn presents the check for payment, the bank dishonors it. Lynn may successfully sue a. City Bank. b.
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This note was uploaded on 01/30/2012 for the course BUL 3022 taught by Professor Mr.carpenter during the Spring '11 term at FAU.

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Practice test 1 - 1. John writes a check to Kay as payment...

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