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50 Cards in this Set
- Front
- Back
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A contract is an agreement between two or more parties that is: A. In writing B. Legally Binding C. A promise to pay money D. Unfortunate |
B. Legally Binding |
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A contract must include an offer, an acceptance and: A. Consequences B. Concentration C. Consideration D. Consternation |
C. Consideration |
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The statute of frauds requires contracts involving more than certain value to be: A. In writing B. Notarized C. Signed by both parties D. Copied three times |
A. In writing |
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Consideration means:
A. To think about something B. That you accept the terms of a contract C. That you didn't agree to the contract on a whim D. A bargained-for exchange of promises or items of value |
D. A bargained-for exchange of promises or items of value
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When considering the capacity of someone to form a contract, you should consider all of these except: A. Whether the person was of legal age to contract B. Whether the person has a driver's license C. Whether the person is mentally competent to understand and agree D. Whether the person was under the influence of alcohol or drugs |
B. Whether the person has a driver's license |
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John calls the doctor and makes an appointment. John goes to the doctor's office at the time of the appointment and is examined and treated by the doctor. Other than the scheduling of the appointment, there was no discussion between John and the doctor about what they expected from each other. At the end of the appointment, John's responsibility to pay the doctor and the doctor's right to expect payment from John are a result of: A. An express contract B. An implied-in-fact contract C. A quasi-contract D. John doesn't owe the doctor anything because they did not reach an agreement |
B. An implied-in-fact contract |
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A breach of contract is when:
A. One party offers to make a contract B. Contract negotiations stall C. One party does not perform his part of the contract D. When a contract is against the law |
C. One party does not perform his part of the contract
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Legal remedies for the breach of a contract include: A. Damages B. Rescission C. Specific performance D. All of these |
D. All of these |
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The Uniform Commercial Code is a: A. Federal law governing commercial contracts B. Model law drafted by legal scholars and business experts C. City Ordinance D. Regulation of the Federal Business Administration |
B. Model law drafted by legal scholars and business experts |
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The Uniform Commercial Code has been adopted, with minor changes, by: A. Forty-nine States B. The United States Congress C. The European Union D. The United Nations |
A. Forty-nine States (Louisiana) |
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In Commercial Law, the term "negotiable" refers to: A. A pride that is subject to further discussion B. Contract rights that can be transferred without the contract defenses that existed between the original parties to the contract. C. A lawsuit that is open to settlement D. Property rights that may be bought or sold by anyone |
B. Contract rights that can be transferred without the contract defenses that existed between the original parties to the contract. |
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All of the following are types of commercial paper except: A. Notes B. Certificates of Deposit C. Checks D. Lease Agreements |
D. Lease Agreements |
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The drawer of a check is: A. The bank whose routing number is on the check B. The person or entity whose name is written in the "Pay to the Order Of" blank C. The person who writes the check D. The cashier who cashes the check |
C. The person who writes the check |
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The maker of a certificate of deposit is always: A. A natural person B. A corporation C. A bank D. The cashier who cashes the check |
C. A bank |
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What do you call the person or entity who is ordered to pay a draft? A. The defendant B. The drawer C. The drawee D. The payee |
C. The drawee |
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A check is a draft drawn on a bank that is payable upon: A. The date on the check is issued B. The "Pay On" date listed on the check C. Demand D. A showing that the person cashing the check is the same as the person listed in the "Pay To The Order Of" blank |
C. Demand |
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A depositary bank is: A. The first bank to which an item is presented for collection B. The bank where a check sits for more than 10 days C. The bank that ultimately pays a check out of the Drawer's account D. Any bank that handles a check |
A. The first bank to which an item is presented for collection |
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The term, "Honor" means: A. To give respect B. Having pride in oneself C. To pay or accept an instrument D. To refuse to pay or accept an instrument |
C. To pay or accept an instrument |
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A settlement can be either ______ or final. A. Temporary B. Double C. Disputed D. Provisional |
D. Provisional |
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A person who deposits money with a bank creates what kind of relationship between himself and the bank? A. Drawer - Drawee B. Debtor - Creditor C. Landlord - Tenant D. All of the above |
B. Debtor - Creditor |
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A negotiable instrument may be: A. Hand-written B. Typed C. Printed D. All of the above |
D. All of the above |
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To be negotiable, an instrument must be signed by: A. The president of the United States B. A bank president C. The maker or drawer D. The depositary bank |
C. The maker or drawer |
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According to UCC §3-104(1)(a), The signature on a negotiable instrument: A. Must be hand-written in blue ink B. Must be printed legibly C. May be omitted D. May be typed, written, or stamped |
D. May be typed, written, or stamped |
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To be negotiable, an instrument must contain: A. A promise to pay B. An order to pay C. Both A and B D. Either A or B |
D. Either A or B |
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A promise or order to pay must be ______ for the instrument to be negotiable: A. Unconditional B. Unimportant C. Underlined D. Undetermined |
A. Unconditional |
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A negotiable instrument must be payable in: A. Any goods or commodities B. Money C. Gold D. Diamonds |
B. Money |
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A negotiable instrument must be payable on demand or at a ______ time. A. Definite B. Undetermined C. Convenient D. Governmentally prescribed |
A. Definite |
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The magic words of negotiability are "Order" and: A. Operator B. Acknowledgement C. Bearer D. Owner |
C. Bearer |
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Where the terms of a negotiable instrument are inconsistent: A. Printed terms control hand-written terms B. The entire instrument is void C. Hand-written terms control printed or typewritten terms D. You should ask your teacher |
C. Hand-written terms control printed or typewritten terms |
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To negotiate "order paper," a transferor must endorse the instrument and _______ it to the transferee: A. Assigning B. Delivering C. Promising D. Destroying |
B. Delivering |
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Which of these is not a possible status of a third party regarding a negotiable instrument? A. An assignee B. A holder C. A creator D. A holder in due course |
C. A creator |
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A holder in due course must take the instrument: A. For value B. In good faith C. Without knowledge of any defenses D. All of the above |
D. All of the above |
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Which of the following is not an example of taking an instrument "for value?" A. Consideration for a contract B. Taking a negotiable promise to pay C. Taking a negotiable instrument in payment of an existing debt D. Purchase of an instrument for less than its face value |
A. Consideration for a contract |
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"Good faith" as required to be a holder in due course means: A. Trusting the person who sold you the instrument B. Believing that the instrument is worth its face value C. Honesty in fact in the conduct or transaction concerned D. The requirement to pay the face value of an instrument |
C. Honesty in fact in the conduct or transaction concerned |
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"Notice" of a defense, in the context of a holder in due course, means: A. Actual knowledge of a fact B. Having received notification of a fact C. Having reason to know that a fact exists D. All of the above |
D. All of the above |
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Which of these is not an example of an instrument being overdue? A. Reason to know that any part of the principal amount is overdue B. Demand paper taken with reason to know that demand has already been made C. Demand paper taken an unreasonable amount of time after issuance D. Order paper taken after the order to pay was made |
D. Order paper taken after the order to pay was made |
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A person may acquire the rights of a holder in due course in all of the following ways except: A. By taking a properly negotiated negotiable instrument for value, in good faith, and without notice of any defenses B. By taking a negotiable instrument from a holder in due course C. By taking a negotiable instrument down the stream of commerce from a holder in due course D. By taking a negotiable instrument as a gift |
D. By taking a negotiable instrument as a gift (value) |
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Holders in due course are protected from what kind of defenses to the instrument? A. Personal defenses B. Real defenses C. Equitable defenses D. Legal Defenses |
A. Personal defenses |
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The FTC prohibits the use of the "holder in due course concept" against consumers in what kind of transactions? A. Cash-only transactions B. Credit transactions C. Mortgages D. Sale of collectors' items |
B. Credit Transactions |
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Which of the following is not required to make one a holder in due course? A. A negotiable instrument B. Proper negotiation C. Receiving for value in good faith D. Receiving the instrument after its maturity date |
D. Receiving the instrument after its maturity date |
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As a general rule, a party's liability on a commercial instrument is based on his: A. Signature on the instrument B. Interest in the instrument C. Having read the instrument D. Knowledge about the instrument |
A. Signature on the instrument |
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The liability of a party on a commercial instrument will vary based on his: A. Liquid assets B. Capacity C. Knowledge of defenses D. Bank account |
B. Capacity |
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Which of the following is not a capacity that will impose liability on a party to a commercial instrument? A. Maker of a note B. Drawer of a draft C. Payee of an instrument D. Endorser of a commercial instrument |
C. Payee of an instrument
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Debbie Employee executes a promissory note to Vinnie Vendor on behalf of ABC Corporation. Under which of the following circumstances will ABC Corporation be liable to Vinnie Vendor on the note? A. If Debbie Employee executed the note without knowledge or authority from her employer B. If Debbie Employee forged the signature of her employer on the note C. If Debbie Employee did not work for ABC corporation D. If Debbie Employee executed the note at the direction of her employer |
D. If Debbie Employee executed the note at the direction of her employer |
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What is the difference between a Primary Party and a Secondary Party on a commercial instrument? A. A primary party is someone who is automatically liable on the instrument, a secondary party has only conditional liability B. A primary party is the person who created the instrument and a secondary party is anyone who takes the instrument subsequently C. A primary party must sign the instrument, but a secondary party may not D. A primary party stands to receive money from an instrument, but a secondary party stands to pay money on an instrument |
A. A primary party is someone who is automatically liable on the instrument, a secondary party has only conditional liability |
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A maker of a note assumes an obligation to pay a note as worded when? A. When he delivers it to the payee B. When he executed it C. When it was presented for payment D. All of the above |
B. When he executed it |
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The drawee of a draft assumes an obligation to pay the draft when? A. When the drawer issues it B. When the payee presents it for payment C. When the drawee accepts it D. When the payee endorses it |
C. When the drawee accepts it |
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Which of the following is not a condition that triggers the liability of a secondary party? A. Presentment B. Dishonor C. Notice of Dishonor D. Payment |
D. Payment |
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If John presents a check for payment at First Bank, and First Bank requires John to produce proof of his identification, what happens if John does not produce proof of identification? A. His presentment is invalidated B. The check is dishonored C. Nothing, the bank cannot require proof of identification D. All of the above |
A. His presentment is invalidated |
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Which of the following are Secondary Parties who may have Conditional Liability? A. Accommodated parties B. Guarantors C. Endorsers D. All of the above |
D. All of the above |
