Mann_BLRB 9_TB_Ch27

Business Law and the Regulation of Business

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Chapter 27—Liability of Parties TRUE/FALSE 1. Elder, an authorized agent for Mullins, signs a negotiable instrument, “Mullins, principal, by Elder, agent.” Mullins has primary liability and Elder has secondary liability on the instrument. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 2. Warranty liability is based on signature; thus, it may not be imposed on nonsigners. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 3. An unauthorized signature may bind a principal who allowed the signature to be made through his own negligence. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 4. An accommodation party will always be primarily liable on an instrument. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 5. A drawee bank is primarily liable after it accepts the check. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 6. Indorsers of all instruments incur primary liability on the instrument. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 7. The law does not impose contractual liability on those who sign, or have a representative agent sign, a negotiable instrument. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 8. A drawee bank’s refusal to certify a check constitutes dishonor of the instrument. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 9. The signature of the maker of a note may be typewritten or signed by means of a signature stamp so long as it represents a present intention to authenticate the instrument. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 10. A signature may be made by an individual herself or by an authorized agent. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 11. "Presentment" is necessary within 10 days of the date of issuance of a check. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic
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12. Authorized agents cannot execute negotiable instruments on behalf of their principals. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 13. Misty wrote a check to Acme for $220. She is discharged from liability on the check if Acme does not present the check for payment within 30 days after the date the check was signed. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 14. Checks, when accepted, are said to be certified. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 15. Presentment for payment is one step necessary to charge an indorser with the obligation to pay. ANS: T TOP: AICPA BB-Legal MSC: AACSB Analytic 16. Return for lack of proper indorsement constitutes a dishonor of the check. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 17. Failure to give notice of dishonor will discharge the drawer from having to pay on the instrument. ANS: F TOP: AICPA BB-Legal MSC: AACSB Analytic 18. The condition precedent to the liability of the drawer of an unaccepted draft is notice of dishonor. ANS: F
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Mann_BLRB 9_TB_Ch27 - Chapter 27-Liability of Parties...

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