Mann_BLRB 9_TB_Ch25

Business Law and the Regulation of Business

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Chapter 25—Transfer TRUE/FALSE 1. Under the shelter rule, the transferee gets the rights of the transferor even if the transfer is not for value. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 2. The requirements for negotiation are the same for both order paper and bearer paper. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 3. A holder must actually have the instrument in his possession. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. "Order paper" is negotiated by delivery only. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 5. Marie is the bookkeeper for the Buildco Construction Company. She makes out the payroll; prepares all of the payroll checks and reconciles the bank statements for the firm. She decides to increase her in- come by padding the payroll; accordingly, she makes out a check in the name of someone who does not exist. She then indorses the check with the payee’s name and her name and cashes the check her- self at First Bank where the company has its account. Under the fictitious payee rule, Buildco and not the bank will be liable for this check. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. The transfer of a nonnegotiable promise or order operates as an assignment. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 7. An indorsement "for deposit" is a collection indorsement. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 8. The principal advantage of negotiable instruments is their legitimacy. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. Maxine indorsed her paycheck by signing her name on the back, but she lost it on the way to the bank. The check is now comparable to cash because it is a bearer instrument. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 10. The courts will never presume a negotiation of order paper was intended; the parties must clearly in- dicate a negotiation or else the courts will presume an assignment was intended. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic
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11. A qualified indorsement destroys negotiability. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 12. "Pay to the order of Jose Dejesus" is a special indorsement. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic | AACSB Diversity 13. The impostor rule is an exception to the general rule that negotiation of any order instrument requires a valid indorsement by the person to whose order the instrument is payable. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 14. Whether a transfer is by assignment or by negotiation, the transferee does not acquire the rights the transferor had. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 15. If a person paying an instrument subject to the impostor rule fails to exercise ordinary care, the issuer may recover from the payor to the extent the payor's negligence contributed to the loss. ANS: T
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Mann_BLRB 9_TB_Ch25 - Chapter 25-Transfer TRUE/FALSE 1....

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