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Exam 16: Sales and Lease Contracts: Performance, Warranties, and Remedies

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Question 41

Multiple Choice

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Reference - Yard Mowing. Paula agreed to mow John's yard once a week for $50 per week throughout the summer. Paula, however, was having trouble getting her money from John. On one occasion, he in handwriting gave her an IOU stating "I, John Jones, owe Paula Smith $50" which he signed at the end. A couple of weeks later, John did not have the money with which to pay Paula for additional mowing, and he handwrote the following on a piece of paper and gave it to her: "I, John Jones, promise to pay Paula Smith or to bearer, the sum of $100 on Monday, July 22, 2012." Paula quit mowing John's yard, and disgusted with John, Paula assigned both documents to Vince. When Vince presented the documents to John, John refused to pay on the basis that after inspecting the yard, he decided that Paula was doing a poor job. Vince told him the documents constituted negotiable instruments, but John disagreed. What is the effect of the instruments being written by hand?

A) Handwriting does not prevent the instruments from being considered negotiable only because neither Paula nor John would be considered merchants in the transactions at issue.
B) Handwriting does not prevent the instruments from being considered negotiable only because John would not be considered a merchant in the transaction at issue, and Paula's status as a merchant is irrelevant.
C) Handwriting does not prevent the instrument from being considered negotiable only because Paula would not be considered a merchant in the transaction at issue, and John's status as a merchant is irrelevant.
D) Handwriting does not prevent the IOU instrument from being negotiable, but it does prevent the other instrument from being negotiable.
E) The issue of the instruments being handwritten does not prevent either from being considered negotiable.

F) B) and D)
G) All of the above

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Question 42

Multiple Choice

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If an instrument is silent as to the time of payment, which of the following is assumed by the UCC?

A) That it is a demand instrument
B) That it is a time instrument
C) That it is a void instrument
D) That it is a voidable instrument
E) That it is a nonnegotiable instrument

F) All of the above
G) B) and E)

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Question 43

Multiple Choice

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Which of the following is an order by a drawer to a drawee to pay a payee?

Which of the following is a substitute for cash?

What is the difference between a demand negotiable instrument and a time negotiable instrument?

Set forth the requirements generally required for a check to be considered properly payable.

What characteristics must a written document have in order to satisfy the requirement that a negotiable instrument be in writing?

Which of the following is the payee's or last endorsee's signature and nothing else?

Banks are required by the UCC to certify the check if a customer has sufficient funds in the account.

A ______________ is a specific draft that orders the bank to pay a fixed amount of money on demand.

Reference - Book Payment. Molly and Pat signed a contract providing that "Pat will furnish the correct used business law book for use in Molly's business law class; and in return on August 15, 2011, Molly promises to pay Pat $50 for the book." Molly took the book and planned to pay Pat. Meanwhile, Pat properly assigned the contract Molly had signed to Jack. When Molly went to class, however, she discovered that the book was the incorrect book. When Jack asked Molly for payment, Molly refused. Molly told Jack that the book was useless to her and that she was not paying either him or Pat anything for it. Jack told Molly that he had an enforceable assignment in the form of a negotiable instrument and that he could collect regardless of whether the book was useless. Molly did not believe him. Continuing with her attempt to save money on books, Molly agreed to buy Tim's U.S. history book for $40. She had an oral agreement with Tim that he would give her the book and that she would pay him in three days. This time Molly got the right book. Tim, in writing, properly assigned the right to the $40 payment to Richard. Richard asked Molly for the money. Molly admitted her agreement with Tim but told Richard that she was not going to pay him because he did not have a negotiable instrument. Molly also purchased a communications book from Sam promising in writing to give him in return the next day, to his order, a used DVD player she owned. What is the effect of Molly agreeing to give Sam a DVD in return for the book?

Which of the following is false regarding the UCC's signature requirement for a negotiable instrument?

What does the Truth-in-Savings Act require regarding information to be provided to customers before accounts are opened?

The ______ bank is the bank upon which a check is drawn.

Which of the following is the party giving the order to pay on a draft?

Which of the following governs the transfer of checks between banks?

The law does not permit an oral negotiable instrument.

With a ______________ instrument, payment can be made only at a specific time designated in the future.

Which of the following is money stored electronically on microchips, magnetic strips, or other computer media that would allow for the elimination of physical currency?

Which of the following is a written document containing the signature of the creator that makes an unconditional promise or order to pay a sum certain in money at either a time certain or on demand?