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How Well Do You Know Negotiable Instruments?
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How Well Do You Know Negotiable Instruments?

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Questions and Answers

What is a negotiable instrument?

  • A signed writing containing a conditional promise to pay an exact sum of money.
  • A signed writing containing an unconditional promise to pay an exact sum of money. (correct)
  • A verbal agreement to pay a certain amount of money.
  • A written agreement to pay a certain amount of money.

    • What is a negotiable instrument?

  • A signed document containing a conditional promise to pay a certain amount of money.
  • An unsigned document containing an unconditional promise to pay a certain amount of money.
  • A signed document containing an unconditional promise to pay a certain amount of money. (correct)
  • An unsigned document containing a conditional promise to pay a certain amount of money.

    • Which law governs negotiable instruments?

  • The Constitution
  • The UCC (correct)
  • The IRS code
  • The Criminal Code

    • Which law governs negotiable instruments?

    <p>The Uniform Commercial Code (UCC).</p> Signup and view all the answers

    Which of the following is not a type of negotiable instrument?

    <p>Bonds</p> Signup and view all the answers

    How many types of negotiable instruments are specified by the UCC?

    <p>Four.</p> Signup and view all the answers

    What is the difference between drafts/checks and notes/CDs?

    <p>Drafts/checks are orders to pay, while notes/CDs are promises to pay.</p> Signup and view all the answers

    What is the difference between a draft and a check?

    <p>None of the Above.</p> Signup and view all the answers

    What are the requirements for an instrument to be considered negotiable?

    <p>Being in writing, signed by the maker or drawer, containing an unconditional promise or order to pay, stating a fixed amount of money, being payable on demand or at a definite time, and being payable to order or bearer.</p> Signup and view all the answers

    What are the requirements for an instrument to be considered negotiable?

    <p>All of the above</p> Signup and view all the answers

    What is an order instrument?

    <p>An instrument that is payable to a designated person.</p> Signup and view all the answers

    What is the difference between an order instrument and a bearer instrument?

    <p>An order instrument is payable &quot;to the order of an identified person&quot; or &quot;to an identified person or order,&quot; while a bearer instrument does not designate a specific payee</p> Signup and view all the answers

    Under what circumstances is a promise or order to pay conditional (and therefore not negotiable)?

    <p>All of the above</p> Signup and view all the answers

    When is a promise or order to pay conditional and therefore not negotiable?

    <p>All of the above</p> Signup and view all the answers

    What is the importance of the location of the signature on a negotiable instrument?

    <p>It has no importance</p> Signup and view all the answers

    Which of the following is true about the location of the signature on a negotiable instrument?

    <p>It is unimportant.</p> Signup and view all the answers

    Which of the following can qualify as a signature on

    Signup and view all the answers

    Which of the following is true about the signature on a negotiable instrument?

    <p>Almost anything can qualify as a signature</p> Signup and view all the answers

    Which of the following is true about a bearer instrument?

    <p>It is payable to anyone who presents it.</p> Signup and view all the answers

    Which of the following is true about the terms on a negotiable instrument?

    <p>Handwritten terms outweigh typewritten and typewritten terms outweigh preprinted terms.</p> Signup and view all the answers

    Study Notes

    • A negotiable instrument is a signed writing containing an unconditional promise to pay an exact sum of money.
    • Negotiable instruments are governed by the UCC.
    • The UCC specifies four types of negotiable instruments: drafts, checks, notes, and certificates of deposit.
    • Drafts and checks are orders to pay, while notes and CDs are promises to pay.
    • Negotiable instruments must meet certain requirements relating to form and content to be considered negotiable.
    • These requirements include being in writing, signed by the maker or drawer, containing an unconditional promise or order to pay, stating a fixed amount of money, being payable on demand or at a definite time, and being payable to order or bearer.
    • Checks are always demand instruments, while notes and CDs may be payable at a definite time or on demand.
    • An order instrument is one that is payable "to the order of an identified person" or "to an identified person or order."
    • A promise or order to pay is conditional (and therefore not negotiable) if it states an express condition to payment, is subject to or governed by another writing, or states that the rights or obligations with respect to the promise or order are stated in another writing.
    • The location of the signature on the document is unimportant, and almost anything can qualify as a signature.
    1. "Order" means the instrument is payable to a designated person.
    2. The person must be identified with certainty for transfer.
    3. A bearer instrument does not designate a specific payee.
    4. The maker agrees to pay anyone who presents the bearer instrument.
    5. Certain terms make an instrument a bearer instrument.
    6. An instrument payable to a non-existent person is non-negotiable.
    7. Omission of date or postdating/antedating does not affect negotiability.
    8. Handwritten terms outweigh typewritten and typewritten terms outweigh preprinted terms.
    9. Words outweigh figures unless ambiguous.
    10. A check is negotiable even if there is a "nonnegotiable" note on it.

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    Description

    Do you know what makes a negotiable instrument truly negotiable? Take this quiz to test your knowledge on the requirements and types of negotiable instruments governed by the UCC. From drafts and checks to notes and CDs, learn about the essential characteristics that determine whether an instrument can be transferred to another person. Challenge yourself to identify the differences between order and bearer instruments, and discover the significance of certain terms and signatures on these documents. Test your understanding of negotiable instruments with this informative quiz!

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