Business Law II BA 304-01: N/A
Please choose a section. Notes  

Help   My Notes   Logout
bullet Home
bullet Instructor
bullet Syllabus
bullet Course Content
bullet GradeBook
bullet Web Links
bullet Student Registration
bullet Student Handbook
bullet Courses

Chapter 28 - Kinds of Instruments: Parties and Negotiability - Review

<< Back to Chapter 28 - Kinds of Instruments: Parties and Negotiability

1) Instruments are transferable, written, signed promises or orders to pay a specified sum of money.

2) Both drafts and promissory notes may have the quality of negotiability.

3) An unconditional written promise made by one person to another, signed by the maker, that promises to pay on demand a specific sum of money to the bearer is a promissory note.

4) If a check is made payable to Paolo, and Paolo signs on the back of the check, Paolo is the payee and the indorser.

5) The parties to a negotiable promissory note are the maker and the payee.

6) The person to whom the order in a draft is addressed is known as the drawee.

7) The person who writes a promissory note is called the drawer.

8) A person who becomes a party to an instrument to add strength to the instrument for the benefit of another party to the instrument is called an accommodation party.

9) The maker is the person who writes out and creates a promissory note.

10) The drawee on a check is a bank.

11) When a drawee has signified in writing on a draft the willingness to make a specified payment, the drawee is called the acceptor.

12) A person who becomes an accommodation party assumes a certain degree of liability.

13) A drawee has no responsibility until the draft is accepted.

14) A payee is not liable on the instrument until the payee transfers the instrument.

15) When a drawee agrees to make the specified payment on a draft, that person becomes the acceptor.

16) The guarantor is a person who promises to pay the instrument under certain circumstances.

17) The person to whom the order in a draft is addressed is known as the drawee.

18) The person who writes a promissory note is called the drawer.

19) A person who becomes a party to an instrument to add strength to the instrument for the benefit of another party to the instrument is called a(n): accommodation party.

20) The drawee has the capacity to become an acceptor.

21) A payee has no rights in the instrument until it has been delivered to the payee.

22) A guarantor of payment has primary liability.

23) Once an instrument is negotiable, then it can be transferred by negotiation.

24) To be negotiable, an instrument must be in writing, be signed by the maker or the drawer, and contain a promise or order to pay.

25) The signature requirement, as an element of negotiability, can be met by the use of initials, a mark, or a trade name.

26) An instrument is conditional if it states that it is subject to another agreement, makes the duty to pay dependent on the completion of a building, or states that it is payable out of the proceeds of the sale of the drawer's new car.

27) An instrument is nonnegotiable if it gives the holder the right to receive goods or money.

28) An instrument is payable at a definite time if it is payable on or before a stated date, at a fixed period after a stated date, or at a fixed period after sight.

29) An endorsement that does not name the person to whom the paper is negotiated is called a blank endorsement.

30) A check that contains an order to pay an amount of $50 in numbers and $500 in words is enforceable for $500.

31) Negotiability is a characteristic of commercial paper.

32) If an instrument is nonnegotiable, the rights of the parties are governed by the general principles of contract law.

33) A promissory note that is payable "on the date of my marriage" is nonnegotiable even if the maker of the note marries.

34) If an order or promise is not for money, the instrument is not negotiable.

35) The requirement of a sum certain in money is fulfilled even though the interest rate changes at maturity.

36) If an instrument states no time for payment, the note is payable on demand.

37) A negotiable instrument may be antedated.

38) Negotiable instruments are drafts, promissory notes, checks, and certificates of deposit, that in proper form, give special rights as "negotiable commercial paper".

39) A CD is a promise-to-pay instrument issued by a bank.

40) A draft is an order by one party to pay a sum of money to a second party.

41) A check is an order by a depositor on a bank to pay a sum of money to a payee.

42) In addition to regular checks, there are casheir checks, teller's checks, traveler's checks, and money orders.

43) An order paper is an instrument payable to the order of a party.

44) A bearer paper is an instrument with no payee, payable by cash or payable to bearer.

<< Back to Chapter 28 - Kinds of Instruments: Parties and Negotiability

Please choose a section.
Home    Instructor    Syllabus    Course Content    GradeBook    Web Links    Student Registration    Courses


Portions copyright ©2005 The McGraw-Hill Companies.
Any use is subject to the Terms of Use and Privacy Policy.
McGraw-Hill Higher Education is one of the many fine businesses of The McGraw-Hill Companies.