Commercial Law II 1st Tutorial Set PDF

MASTERMINDS STUDY GROUP UNIVERSITY OF GHANA BUSINESS SCHOOL COMMERCIAL LAW II 1ST Tutorial Set 1. Brendan signs a cheque "pay to the order of City College Bookstore" drawn on his account in Delta Bank to pay for his current semester's textbooks. The bookstore deposits the cheque in its account in E...

MASTERMINDS STUDY GROUP UNIVERSITY OF GHANA BUSINESS SCHOOL COMMERCIAL LAW II 1ST Tutorial Set 1. Brendan signs a cheque "pay to the order of City College Bookstore" drawn on his account in Delta Bank to pay for his current semester's textbooks. The bookstore deposits the cheque in its account in Eagle Bank. Like most cheques, this cheque is a. a one-party instrument. b. a four-party instrument. C. a three-party instrument. d. a two-party instrument. 2. Scott presents an instrument that states "pay to the order of Scott" to Town Bank for payment. This instrument is the most common type of negotiable instrument, which is a. a certificate of deposit. b. a cheque. c. a note. d. a trade acceptance. 3. Ian buys a cell phone in Jiffy Mart, using the means that accounts for more retail payments than any other. This means of payment is a. a commercial cheque. b. a debit card. c. a personal cheque. d. a trade acceptance. 4. Kris presents an instrument that states "pay to the order of Liv" to Metro Bank for payment. This is a special type of draft drawn on a bank, ordering the bank to pay a fixed amount of money on demand. This is a. a certificate of deposit. b. a cheque. c. a debit card transaction receipt. d. a trade acceptance. 5. Rikki signs a cheque "pay to the order of Scholar University" drawn on Rikki's account in State Bank to pay her tuition. Rikki is a. the certifier. b. the drawee. c. the drawer. d. the payee. S.K. OFORI We dey 4 U T.A. SENANU 6. Elmo pays First National Bank $1,000 plus a service fee to draw a check on itself made payable to Go Delivery Service. This is a. a cashier's cheque. b. a certified cheque. c. a trade acceptance. d. a traveler's cheque. 7. Jen signs a check "pay to the order of Key" drawn on Jen's account in Little Bank to buy Key's car. Jen asks Little Bank to indicate on the face of the check that it will accept it when Key presents it for payment. If the bank agrees, this will be a. a cashier's cheque. b. a certified cheque. c. a trade acceptance. d. a traveler's cheque. 8. First Community Bank agrees to accept a cheque by setting aside suffi¬cient funds to cover the amount. This cheque is considered a. cashed. b. certified. c. deposited. d. provisionally credited. 9. Pat, the manager of Quik Mart, deposits the store's receipts in its account at Regional Bank. As to the receipts, the relationship between Quik Mart and the bank is a. attorney and client. b. creditor and debtor. c. guardian and ward. d. trustee and beneficiary. 10. Kip writes a check for $1,000 drawn on Local Bank and presents it to Mira. Mira presents the cheque for payment to Local Bank, which dis¬hon¬ors it. The party most likely liable to Mira is a. Kip in a civil suit. b. Kip in criminal prosecution. c. Local Bank in an administrative proceeding. d. neither Kip nor Local Bank. 11. Thelma signs a cheque "pay to the order of Uri" drawn on Thelma's account in Verity Bank. Thelma has $400 in her account but the amount of the cheque is $500, which the bank pays. This is a. a dishonored cheque. b. an overdraft. c. a postdated cheque. S.K. OFORI We dey 4 U T.A. SENANU d. a stale cheque. 12. Liu signs a cheque "pay to the order of Marv" drawn on Liu's account in National Bank. Liu later orders National not to pay the cheque, but the bank pays it over Liu's order. Subsequent cheques were written on Liu's account "bounce." Most likely liable for the costs to Liu is a. any party to whom a subsequent cheque was written. b. Liu. c. Marv. d. National. 13. Dan writes a cheque to Emma on his account at First State Bank. The bank dishonors the cheque even though Dan has sufficient funds in his ac¬count. The bank is a. liable to Dan only. b. liable to Dan and Emma. c. liable to Emma only. d. not liable to Dan or Emma. 14. Dora writes a cheque for $100 drawn on Eastern Bank and presents it to Fast Cash, Inc., for payment. If the cheque is not backed by sufficient funds, Dora may be prosecuted for a. forgery. b. fraud. c. negligence. d. robbery. 15. Echo takes her car to Fix-It, Inc., which repairs the car and bills Echo for $500. Echo writes out a cheque drawn on Capital Bank, but later, believing that Fix-It did not repair the car properly, issues a stop-payment order. Capital Bank pays the check. Capital a. can sue Echo for a wrongful stop-payment order. b. can sue Fix-It for breach of contract. c. can sue no one because it paid a check that was not properly payable. d. is liable for Echo's loss due to the wrongful payment. 16. Dhani signs a cheque "pay to the order of Etan" drawn on Dhani's account in First State Bank and dates the cheque "May 1." Etan presents the check to the bank for payment on December 15. This is a. a dishonored cheque. b. an overdraft. c. a postdated cheque. d. a stale cheque. 17. John writes a cheque to Kay as payment for a DVD player but soon discov¬ers the player is broken. He goes to the drawee bank and orally author¬izes Larry, a bank officer, to stop payment on the cheque. This order is valid for S.K. OFORI We dey 4 U T.A. SENANU a. fourteen days. b. fourteen months. c. thirty days. d. six months. 18. Steve steals one of Tricia's checks and forges her signature. Tricia's bank, Unity Bank, pays the cheque. Tricia can recover from a. Steve, but not Unity Bank. b. Unity Bank, which cannot recover from Steve. c. Unity Bank, which can recover from Steve. d. no one. 19. Trudy forges Uma's signature on a cheque "payable to the order of Trudy" drawn on Uma's account in Verity Bank. Most likely, if the bank pays the cheque a. the Federal Reserve will reimburse all parties for their costs. b. the loss will be apportioned among all of Verity's customers. c. Uma will be liable for the amount. d. Verity will have to recredit Uma's account. 20. Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Downtown Bank. Caleb's forged signature is a. effective if an innocent third party accepts the cheque. b. effective to the degree that it matches Caleb's genuine signature. c. effective to the extent that Downtown Bank debits Caleb's account. d. not effective. 21. Dru signs a check "pay to the order of Eppie" drawn on Dru's account in First Federal Bank. Greta forges Eppie's endorsement. First Federal pays the check. Most likely a. Dru will be liable for the amount. b. Eppie will have to pay Dru for the amount. c. First Federal will have to recredit Dru's account. d. the Federal Reserve will reimburse all parties for their costs. 22. Elmer can write checks on his account at Finance Bank. Gina steals the checks, forges Elmer's signature, and cashes the cheques at Finance. The bank is excused from any liability if, after receipt of the first forged cheque, Elmer fails to report the forgeries within a. five business days. b. fourteen consecutive days. c. one year. d. three years. S.K. OFORI We dey 4 U T.A. SENANU 23. Simon signs a cheque "pay to the order of Tilly" drawn on Simon's account in United Bank. Vela forges Tilly's endorsement, First Federal Bank cashes the cheque, and Vela disappears. United pays First Federal and debits Simon's account. Most likely, the ultimate loss will fall on a. Simon. b. Trudy. c. United Bank. d. First Federal Bank. 24. Clyde issues a check payable to Discount Mart. Elle, Discount's cashier, forges the store's endorsement and deposits the check in her bank account. Clyde's bank, First State Bank, pays the cheque. Clyde can recover from a. Elle, but not First State Bank. b. First State Bank, which cannot recover from Elle. c. First State Bank, which can recover from Elle. d. no one. 25. On Monday, Eve deposited in her account at Fiscal Bank a local cheque for $500. After 5:00 P.M. on Friday, from these funds, Eve can withdraw no more than a. $100. b. $400. c. $500. d. $600. 26. Tom draws a check, on his account in State Bank in New York, payable to Digital Media, Inc., in San Francisco. Digital deposits the cheque in its account at First National Bank. First National deposits the check in the Federal Reserve Bank of San Francisco, which transfers it to the Federal Reserve Bank of New York. That Federal Reserve Bank sends the cheque to State Bank. Digital bank is a. the cashing bank. b. the depositary bank. c. the intermediary bank. d. the payor bank. 27. Tom's bank is _________________ a. the cashing bank. b. the depositary bank. c. the intermediary bank. d. the payor bank. 28. When Digital's bank received the cheque, it was required to pass it on a. before midnight of the next banking day. b. before midnight of the next day, even if it was not a "banking" day. c. before noon of the next banking day. S.K. OFORI We dey 4 U T.A. SENANU d. within five business days. 29. Guaranty Bank receives a check drawn on the account of Get-Rich Industries, Inc., one of the bank's customers, at 3 P.M. Friday. Garry, the presenter of the cheque, is not one of the bank's customers. The bank uses deferred posting with a 2 P.M. cutoff hour. If it decides to dishonor the cheque, it must do so by midnight a. Saturday. b. Sunday. c. Monday. d. Tuesday. 30. Dina's debit card, issued by Eminent Bank, is stolen and used without Dina's permission. Dina tells Eminent Bank within thirty days. Dina may be required to pay no more than a. $5. b. $50. c. $500. d. $5,000. 31. Mike loses his National Bank access card. He realizes his loss the next day but waits a week to call National. Meanwhile, Opal finds and uses Mike's card to withdraw $3,000 from Mike's account. Mike is responsible for a. $0. b. $50. c. $500. d. $3,000. 32. When Mike receives his national statement, he demands that the bank investigate the matter and recredit his account. The bank a. has no duty to investigate. b. must investigate and, if the dispute is not resolved within ten days, recredit Mike's account (at least until the dispute is resolved). c. must investigate and immediately recredit Mike's account (at least until the dispute is resolved). d. must investigate but need not recredit Mike's account. 33. When a banker makes payment of a cheque after banking hours he would be held A. Liable B. Reasonable C. Acceptable D. Confirmable 34. One of the conditions to honor the cheque by the paying banker is that amount in words and figures should S.K. OFORI We dey 4 U T.A. SENANU A. Differ B. Tally C. Be clear D. Be Enough 35. Where a customer has issued a cheque date that is yet to come, such a cheque is called A. Stale cheque B. Post-dated cheque C. Crossed cheque D. Stolen cheque E. Decent cheque 36. Payment of a cheque must be made by the banker within banking hours A. True B. False 37. A bearer cheque is always payable to the bearer A. True B. False 38. Stopped payment cheques should be paid by the banker A. True B. False 39. When a bank pays a cheque according to the apparent tenor, in good faith and without having reason to doubt the bonafide of the presenter, such payment is A. Wrong payment B. Late payment C. Future payment D. Payment in due course 40. Crossing of a cheque can be done by the drawer only A. True B. False 41. A banker who collects a cheque for and on behalf of his customer is A. Collecting Banker B. Paying Banker C. Advising Banker D. Confirming Banker E. Commercial Liability Insurance 42. The insurance industry in Ghana is composed of all the following except S.K. OFORI We dey 4 U T.A. SENANU a. Insurance Companies b. National Insurance Commission c. Prudential Insurance d. Insurance Intermediaries e. Re-Insurance Companies 43. Negotiable instruments are money substitutes. A. True B. False 44. The transferee of a negotiable instrument takes the instrument subject to the defects in the transferor's title. A. True B. False 45. Negotiation of bills of exchange operates as an exception to the doctrine of privity of contract. A. True B. False 46. Under Ghanaian law, cheques are an example of ___________ i) Bill of Exchange ii) Negotiable Instrument iii) Financial Instrument A. I only B. I and II only C. I and III only D. All of the above 47. Which of these is the least likely duty required of a customer of a Bank? i) Duty to deposit money in your account ii) Duty to issue cheques in a manner as to prevent fraud and or forgery iii) Duty to communicate any unusual occurrences regarding your account with the bank iv) Duty to manage the transactions on your account by periodic reconciliations A. IV only B. II only C. III only D. I only E. All of the above Use this premise to answer questions 48 to 51 Akosua Mansa is a graduate of UGBS and is 22 years. Her father recently bought her a brand- new Toyota Avalon car for graduating with First Class Honours in Accounting. Akosua's father S.K. OFORI We dey 4 U T.A. SENANU has indicated that Akosua is responsible for insuring the car since she studied insurance law in school. Akosua, therefore, visited Donewell Insurance Group Limited to find out about the various policies they have. At the end of her visit, she bought two policies: Policy A - on the car and payment is made one time only annually Policy B - on her person, where her father and sister will be paid some money should Akosua die; payments are made monthly by Akosua until her death. 48. What is the name of the payments being made by Akosua under the policies? 49. What is the broad type of insurance Akosua bought concerning Policy A? 50. What is the broad type of insurance Akosua bought concerning Policy B? 51. Should Akosua die 10 years after contributing to Policy B, which of the following persons will receive the sum assured? I. Father II. Akosua III. Sister VI. Mother A. All of the above B. Father and Mother only C. Father and Sister only D. Akosua only E. Father only Use the premise below to answer questions 52 to 55 Sherry is a businesswoman who has been doing business with Ming, a manufacturer. In Sherry's line of business, she offers credit to some of her loyal customers to boost sales and increase revenue. On occasion, Sherry ordered products from Ming valued at GHS100, 000.00 but was unable to pay cash for them because her customers had not paid the amount. In her dilemma, she remembered her commercial law lessons from decades ago. She quickly wrote the same words on two different sheets of paper and signed them. The papers read: "Pay Ming a sum of GHS50,000.00 on the presentment of this document." She addressed one of the documents to Vicky and the other to Ramon, who is both her customers and handed them to Ming as her payment. 52. What is the name of the document written or issued by Sherry? 53. In the context of the document above, who is/are the Drawer(s)? 54. In the context of the document above, who is/are the Payee(s) 55. In the context of the document above, who is/are the Drawee(s) S.K. OFORI We dey 4 U T.A. SENANU 56. Two parallel transverse lines drawn across the cheque is called A. Endorsement B. Transfer C. Assignment D. Crossing 57. When a cheque is drawn on a bank, the bank is called the A. Drawer B. Endorser. C. Acceptor D. Drawee 58. The crossing in a crossed cheque can be canceled by A. Endorsee B. Endorser C. Acceptor D. Drawee 59. Mere signature of the payee on the reverse of the instrument is called A. Full B. Blank C. Conditional D. Restrictive Use the premise below to answer questions 60-61 60. Ewa signs an instrument unconditionally promising to pay to "First State Bank" $5,000 with interest in installments with the final payment due June 1, 2012. a certificate of deposit. b. a draft. c. an order to pay. d. a promissory note. 61. With respect to this instrument, First States Bank is a. the drawee. b. the drawer. c. the maker. d. the payee. 62. To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2040. To be negotiable, this instrument must include the signature of S.K. OFORI We dey 4 U T.A. SENANU a. a non-party witness. b. Tuna or Tuna's realtor. c. Uri. d. Verity's chief financial officer. 63. USA Oil Corporation signs an instrument that states it is being executed "in accord with a contract for the purchase of 4,000 barrels of oil dated May 1." This instrument is a. negotiable. b. nonnegotiable, because information about the sale must be obtained from another source. c. nonnegotiable, because it states an express condition to payment. d. nonnegotiable, because the terms of the sale are not clear. 64. To finance the purchase of a car from Giant Auto Sales, Hoppy signs an instrument promising to pay to "Ideal Credit Union" $18,000 with interest in installments with the final payment due May 15, 2014. To be negotiable, this instrument must include on its face a. any conditions on the sale of the car. b. any conditions to the disbursement of the funds. c. any conditions to the repayment of the loan. d. no conditions. 65. Opal signs a promissory note payable to the order of Payday Loan Company. The note states that it is payable "with interest at the legal rate." This note is a. negotiable. b. nonnegotiable, because it does not specify a rate of interest. c. nonnegotiable, because it is a promissory note. d. nonnegotiable, because it is payable only with interest. 66. Ray signs a promissory note for $10,000 in favor of State University (SU). The note does not specify the date of its payment. Ray defaults. In SU's suit to collect on the note, the court will most likely rule in favor of a. Ray, because SU assumed the risk that the note would not be paid. b. Ray, because the note is not payable at a definite time or on demand. c. SU, because the note is an unconditional promise to pay the holder. d. SU, because there is a uniform "default time" for repayment when a date is not specified. 67. EZ Credit Company signs an instrument payable to the order of Flem that states, "The maker of this note at the date of maturity, May 1, 2013, can extend the time of payment, but for no more than a reasonable time." This instrument is a. negotiable. b. nonnegotiable, because it includes an extension clause. c. nonnegotiable, because it is not payable within a definite time. d. nonnegotiable, because it is payable to a specific payee. S.K. OFORI We dey 4 U T.A. SENANU 68. Quincy draws a check payable to "Replay Stadium" to buy two season tickets to the next year's State College football games. This instrument is a. bearer instrument. b. an order instrument. c. valid but nonnegotiable. d. void. 69. Tyrone draws a check payable to "Cash" and presents it to United Bank for payment. This instrument is a. bearer instrument. b. an order instrument. c. valid but nonnegotiable. d. void. 70. The Bank of Ghana may impose any of the following sanctions in the event of the violations of 2004, Banking Act of Ghana except, a. Recommend the removal from any or all of the directors on the board of the bank or restrict their powers b. Appoint a conservator to take over the management of the bank pending a decision on the bank’s future setup c. Appoint a liquidator for the winding up of the bank d. None of the above 71. The parties involved in a draft or a cheque have particular names The person who is ordered to pay the money is called the a. Payee b. Drawer c. Drawee d. Payor 72. A written order was drawn on a bank by a depositor that requests the bank to pay, on demand and unconditionally, a definite sum of money to the bearer of the instrument or the order of a specified person is called a: a. MOU b. Promissory note c. Cheque d. Court order 73. A written notice in which one person promises to pay a certain amount of money to another at a definite time is known as a. Cheque b. Negotiable Instrument c. Promissory note S.K. OFORI We dey 4 U T.A. SENANU d. Court Order 74. A holder of a bill who has given no value or consideration for it is known as a. A holder for value b. A mere holder c. A holder in due course d. A real owner 75. An unconditional order to pay is a __________ a. One-party instrument b. Two-party instrument c. Three-party instrument d. Four-party instrument 76. An unconditional promise to pay is a __________ a. One-party instrument b. Two-party instrument c. Three-party instrument d. Four-party instrument 77. Providing financial services to the public is the a. Financial System b. Financial Institution c. Financial Regulation d. Financial Intelligence 78. To indemnify means to ____________ a) put back in the same financial position just prior to the loss. b) put aside funds to pay for losses reported but not yet paid. c) transfer risk to someone who has better financial resources and can withstand loss. d) make financial provisions for dealing with potential losses. 79. What is the most common form of general insurance in Ghana? a) Property insurance b) Fire insurance c) Motor insurance d) Deposit insurance 80. Amaya's father buy her a car in her name because she made straight As in all her courses in her third year. She decides to put her study of insurance law into practice and insures her car comprehensively with Donewell Insurance Company for a sum assured of GHS100,000. To get more money in case of an accident, she, in turn, goes to Activa Insurance, GLICO Insurance, and Star Assurance to insure the same car for GHS100,000 at each of these insurance companies. S.K. OFORI We dey 4 U T.A. SENANU Amaya, unfortunately, gets involved in an accident and decides to claim from all the insurance companies above. What is the maximum amount that all the insurance companies will pay to her under her claim? a) GHS300,000 b) GHS200,000 c) GHS100,000 d) GHS400,000 81. The two (2) major categories of insurance business in Ghana are a) General/ non-life insurance and life insurance b) Motor insurance and health insurance c) General/ non-life insurance and motor insurance d) Life insurance and motor insurance 82. Assume today is 1st May 2009. Madam Bediako issues a cheque for GHS2,000 to her son's school for payment of his school fees What is the latest date that the school can present the cheque for payment a) 4th May, 2019 b) 31st October, 2019 c) 31st December, 2019 d) 31st July, 2019 83. Azumah, realizing that his transportation expenses were increasing decided to lease a vehicle for his personal use from Leasafrica Ghana Limited. As per this contract with Leasafric, he was required to make lease payments of GHSS,000 for 50 months. At the end of the period he, has the right to purchase the vehicle for 5% of the total lease payments made. What type of lease arrangement is this? a) Finance lease b) Hire purchase lease c) Operating lease d) Lease and buy-back 84. To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to "Verity Mortgage Service" $160,000 with interest in installments with the final payment due July 10, 2040. To be negotiable, this instrument must include the signature of a. non-party witness. b. Tuna or Tuna's realtor. c. Uri. d. Verity's chief financial officer. 85. USA Oil Corporation signs an instrument that states it is being executed "in accord with a contract for the purchase of 4,000 barrels of oil dated May 1." This instrument is a. negotiable. S.K. OFORI We dey 4 U T.A. SENANU b. nonnegotiable, because information about the sale must be obtained from another source. c. nonnegotiable, because it states an express condition to payment. d. nonnegotiable, because the terms of the sale are not clear. 86. Tyrone draws a check payable to "Cash" and presents it to United Bank for payment: This instrument is ___________ a. a bearer instrument. b. an order instrument. c. valid but nonnegotiable. d. void. 87. Akosua signs a note that includes a clause under which the note's holder can delay the date of its payment indefinitely. This is a. an acceleration clause. b. an extension clause. c. an immaturity clause. d. a stop-payment clause. 88. On May 1st, Kwabena signs a cheque that is payable to the order of Extra Credit Corporation and that is dated July 1. This cheque is a. negotiable. b. nonnegotiable, because it is payable to Extra Credit Corporation. c. nonnegotiable, because it is postdated. d. nonnegotiable, because it is signed by Doug. 89. Petra signs a check payable to Quincy, who indorses the back, gives it to Regional Credit Union, and receives cash. The transfer of the check from Quincy to the credit union is a. an assignment. b. a negotiation. c. a payment. d. a sale. 90. Vladimir negotiates a bearer instrument to Wendy by a. assignment. b. delivery. c. presenting it in response to a demand by Wendy. d. promising to pay. S.K. OFORI We dey 4 U T.A. SENANU