Multiple Choice 4 points each
Identify the choice that best completes the statement or answers the question.
1. Revised UCC Article 3 refers to which of the following parties as secondary obligors?
a. drawers
b. indorsers
c. accommodation parties
d. all ofthe above
2. A payee has no rights in an instrument until:
a. the drawer or the maker has delivered the instrument to the payee.
b. an acceptor has been estabiished.
c. an accommodation party has signed the instrument.
d. a guarantor has signed the instrument.
3. Which of the following terms would make an instrument non-negotiable?
a. It specifies collateral as security for a debt.
b. It is undated
c. It is payable in foreign money.
d. It gives the holder the right to receive goods or money.
4. Al instrument is payable at a definite time if it is payable:
a. on or before a stated date.
b. at a fixed period after a stated date.
c. at a fixed period after sight.
d. all ofthe above.
5. Which of the following factors is irrelevant in detennining whether an instrument is negotiable?
a. the fact that it is in writing
b. the fact that it is notarized
c. the fact that it is unconditional
d" the fact that it calls for payment of a definite sum of money
6. A certified check was presented for payment to the drawee bank, and the drawee bank dishonored the check.Which of the following parties is/are potentially liable to the holder?
a. the drawee only
b. the drawer only
c. the drawer and the drawee
d. ttre maker
7. Which of the following statements is correct concerning a stale check?
a. A check is stale when dated more than six (6) months before presentation to the bank,
but the bank may in good faith pay the check.
b. A check is stale when dated more than one (1) year before presentation to the bank.
c. A check is stale when dated more than six (6) months before presentation to the bank,
and the bank is legally prohibited from paying the check.
d. Certifred checks are stale after three (3) months.
8. Payment over a stop payment order gives rise to liability:
a. when the drawee has had written notice of the stop payment within one year.
b. when the drawee has been notified any time before the check is presented for payment.
c. when the drawee has been notified orally within fourteen days and the drawer suffers a
loss by payrnent of the check.
d. when the drawee has been notified in writing within six months, regardless of whether
the drawer suffered a loss.
9. A bank will not be liable for payment of a check on which the drawer's signature has been forged if:
a. the bank could not have detected the forgery through a reasonable investigation.
b. there are more than two prior indorsers of the check.
c. the bank gives a cashier's check in payment of the depositor's check.
d. the drawer's negligence contributed substantially to the forging of the sigpature.
10. A forged indorsement must be reported within:
a. thrty (30) days.
b. six (6) months.
c. one (1) year.
d. three (3) years.
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