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Exam 25: Transferability and Holder in Due Course

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Question 1

True/False

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The effect of a conditional indorsement on the back of an instrument is the same as the effect of conditional language that appears on its face.

A) True
B) False

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Question 2

Multiple Choice

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Dora receives a check from Eagle Corporation.Dora in?dorses the check to First National Bank by writing "pay to First Nat'l Bank only" and signing her name.This is

A) a blank indorsement.
B) a qualified indorsement.
C) a restrictive indorsement.
D) a special indorsement.

E) B) and C)
F) None of the above

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Question 3

Multiple Choice

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Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.After Trey writes "Pay to Trey" above Rollo's signature,further negotiation of the check

Clem gets a $100 check as a gift from Daria.Clem crudely increases the amount of the check to $1,00-the alteration is obvious-and transfers it to eReady Sets,Inc.,in exchange for a 3D HD TV.eReady deposits the check in its bank account at First Town Bank.HDCs of this check include

Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.By writing "Pay to Trey" above Rollo's signature,Trey

Colby fraudulently induces Dian to sign a note.Colby sells the note to Elen,who does not know of the fraud and takes the note for value and in good faith,and thus becomes an HDC.Elen sells the note to Fred,who sells the note back to Colby.Does Colby acquire Elen's HDC rights in the note?

Ivy signs a check payable to Jon and gives it to him.Jon in?dorses the back,and transfers the check to Ked.To negotiate the check to Luis,Ked must

An executory promise does not constitute sufficient value to make the promisor a holder.

Petra signs a check payable to Quincy,who in?dorses the back,gives it to Regional Credit Union,and receives cash.The transfer of the check from Quincy to the credit union is

Florencia,who is not a GigaBank customer,attempts to cash a check drawn on the bank.The check is considered dishonored if GigaBank

Tiffany transfers a draft by signing it and delivering it to Uma.Tiffany is

A person who receives an instrument as a gift normally becomes an ordinary holder.

Ollie negotiates an order instrument to Phil by

If a person purchasing an instrument does not know and has no reason to know that it has been dishonored,the person cannot become an HDC.

Eppie gives a check to Fund Investments to buy 100 shares of stock in GR8 Tech Corporation for Eppie.The price of the shares is constantly fluctuating.Fund Investments asks Eppie to leave the amount of the check blank and allow it to fill in the price when making the purchase.Eppie agrees.Fund Investments buys the stock when the price is $4,000,but fills in the check for $5,000.The check is negotiated as payment for a $5,000 debt to Hasty Accounting Services,which takes the check in good faith and without no?tice of Fund Investments's act.Hasty later learns that Fund Investments was not author?ized to fill in the check for $1,000 over the price.Is Hasty an HDC? If so,for how much?

Knowledge of one defense precludes a holder from asserting HDC status in regard to all other defenses.

A holder does not take an instrument for value if he or she gives a negotiable instrument as pay?ment.

Bob receives a check from Chris.Without Bob's knowledge,Dan indorses it in his own name and deposits it in his account at Elm City Bank.In Bob's subsequent suit against the bank for the money,the court will most likely rule in favor of

Fact Pattern 25-A1 (Questions A5-A8 apply) Rollo obtains a check payable to his order from Simone.Rollo signs the back and gives the check to Trey.Trey writes "Pay to Trey" above Rollo's signature. -Refer to Fact Pattern 25-A1.When Trey writes "Pay to Trey" above Rollo's signature,the check becomes

A person who acquires a check stamped "insufficient funds" is put on no?tice and thereby acquires HDC status.