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Q:
Generally, the funds represented by a deposited local check must be available for withdrawal within one business day.
Q:
A will must normally be attested to by two or three witnesses.
Q:
Opalina asks Paolo, who does not understand English, to sign what Opalina says is an application to open a bank account. In fact, the "application" is a note. If sued on the note by an HDC
a. Paolo must pay the note.
b. Paolo's best defense would be fraud in the execution.
c. Paolo's best defense would be fraud in the inducement.
d. Paolo's best defense would be mistake.
Q:
A bank cannot recover from a holder who cashes a check bearing a forged indorsement once the bank has accepted and paid the item.
Q:
A bank that fails to detect an alteration to its customer's check is liable to the customer for the loss.
Q:
Undue influence can occur when a named beneficiary is in a position to influence the making of a will.
Q:
Cash National Bank is an HDC of a note for $1,000 on which there is the forged signature of "Dudley." If sued on the note by Cash
a. Dudley must pay the note.
b. Dudley's best defense would be fraud in the execution.
c. Dudley's best defense would be material alteration.
d. Dudley's best defense would be forgery.
Q:
To execute a valid will, a testator must remember the "natural objects of his or her bounty."
Q:
Jackson pays Phil in good faith for a promissory note. Phil warrants that the draft has not been altered. This warranty is a
a. presentment warranty.
b. consideration warranty.
c. conditional warranty.
d. fixed warranty.
Q:
A customer must examine a bank statement and report any discovered forged signature to recover from the bank for the forgery.
Q:
In most states, a person must be sixteen years of age to execute a valid will.
Q:
Ada is the maker of a note, on which Bart is secondarily liable. Cash & Credit Company (C&C) is the current holder of the note. Bart will be obliÂgated to pay the note if
a. Ada defaults on the note.
b. C&C breaches a transfer warranty.
c. C&C negotiates the note to Delta Collection Agency, a third party.
d. C&C presents the note for payment.
Q:
A bank that pays a customer's check with a forged drawer's signature can generally pass the loss onto the customer.
Q:
A testator is a decedent who dies without a will.
Q:
A forged signature is effective as the signature of a drawer to the extent that is resembles the drawer's actual signature.
Q:
Biff signs a note "payable to the order of County Credit Union." Unless Biff has a valid defense against payment, Biff's liability on this note is
a. nothing.
b. primary.
c. secondary.
d. conditional.
Q:
An executor is a personal representative appointed by a court for a deceÂdent who dies without a will.
Q:
The death of a customer revokes a bank's authority to pay an item.
Q:
Rubin writes a check drawn on his account at Clearwater Bank and payable to the order of Gwyn. The bank does not pay the check. Rubin is
a. absolved of liability on the check.
b. liable to Gwyn for the amount of the check.
c. liable to the bank for the amount of the check.
d. entitled to payment of the amount of the check from Gwyn.
Q:
If no heirs are found, the property of a decedent is transferred to a charitable organization.
Q:
The incompetence of a customer revokes a bank's authority to pay an item.
Q:
Stature Loan Company has notice that a promissory note is overdue if the note is a demand instrument and Stature takes it
a. an unreasonable time after its due date.
b. before its due date.
c. on its due date.
d. without noticing its due date.
Q:
An insured's lack of an insurable interest is an absolute defense against payment.
Q:
Because insurance law follows contract law, bad faith tort actions against insurers are not allowed.
Q:
Dewey is the payee for a check written by Fred. Cash Credit Corporation (CCC) accepts the check from Dewey as part of a payment. CCC cannot become a HDC if
a. the check has been transferred more than once.
b. the check has been outstanding for one week.
c. the check has been outstanding for more than ninety days.
d. there are bankruptcy proceedings against Fred.
Q:
An oral stop payment order is valid for thirty days.
Q:
An insurer has a duty to avoid the payment of claims.
Q:
Wilson buys a promissory note from Oli. The note is due on December 5. December 5 is a Sunday. The note is
a. payable anytime the week of December 6.
b. payable December 6.
c. payable on December 5 only.
d. defective.
Q:
A stale check is one that has been outstanding for longer than one month.
Q:
An applicant for insurance has a duty to disclose only material facts that the insurer asks for.
Q:
Elinor performs ten hours of house cleaning for Zack in exchange for a promissory note for $400. At the time that Elinor accepts the note, she is aware that bankruptcy proceedings are being filed against Zack. Elinor
a. can obtain HDC status.
b. cannot obtain HDC status, because she knows that there are bankruptcy proceedings against Zack.
c. cannot obtain HDC status, because she did not fulfill the value requirement.
d. cannot obtain HDC status, because she did not fulfill the good faith requirement.
Q:
A written stop payment order is valid for fourteen days.
Q:
The words used in an insurance contract are interpreted against the party who applied for the policy.
Q:
A bank is obligated to pay an uncertified check presented less than six months from its date.
Q:
Jill, in good faith and for value, gets from Kiley a negotiable bearer inÂstruÂment. Jill does not know that Kiley stole the instrument. Jill is
a. an HDC.
b. not an HDC, because Kiley did not acquire the instrument for value.
c. not an HDC, because Kiley did not acquire the instrument in good faith.
d. not an HDC, because the instrument is a bearer instrument.
Q:
A bank has no right to charge a customer's account for the amount of a stale check.
Q:
Muni Investment Company signs a check payable to Enterprise Lenders, Inc., to buy a promissory note executed by Fallow Corporation. This check
a. does not constitute sufficient consideration for HDC status.
b. does not satisfy the value requirement for HDC status.
c. satisfies the consideration requirement for HDC status.
d. satisfies the value requirement for HDC status.
Q:
Misstatements or misrepresentations in an application for insurance can void a policy.
Q:
A drawer is liable to the holder of a check if the check is not honored.
Q:
Beth, an accountant for Credits & Debits, acquires a negotiable instruÂment from Ellen by promisÂing to pay its face value in thirty days. Beth acÂquires the status of an HDC when she
a. acquires possession of the negotiable instrument.
b. agrees with Ellen to buy the negotiable instrument.
c. pays the face value due on the instrument.
d. transfers the instrument to another party.
Q:
Under a coinsurÂance clause, a homeowner who insures a home for 80 percent of its value can recover only 80 percent of the cost for damage to it.
Q:
Insurance coverage is never effective until a formal written policy is issued.
Q:
A check carries with it an implied promise to reimburse the bank for paying the check.
Q:
Jeff's grandmother is the payee of a promissory note for $7,500. Jeff's grandmother gives Jeff the note for his sixteenth birthday. Jeff is
a. an HDC.
b. not an HDC, because he received the note as a gift.
c. not an HDC, because he is a minor.
d. not an HDC, because the note was for less than $10,000.
Q:
At 1 a.m., on the sidewalk in front of Ace Credit Corporation, which is closed, Ben buys a $500 promissory note for $50 from Curt. When preÂsented with Ben's demand for payment, Diann, the maker of the note, could successfully claim that Ben
a. acquired the note with notice that it was overdue.
b. did not acquire the instrument in good faith.
c. did not give value for the instrument.
d. none of the choices.
Q:
If a life insurance applicant pays a premium but dies before the physical exam, there is obviously no coverage.
Q:
When a check "bounces," its holder can resubmit the check later, hoping that sufficient funds will be available.
Q:
A coinsurance clause provides that two or more people will be covered by the same life insurance policy.
Q:
Entrepreneur Auto Rentals owes Sole Saver Auto Dealership $2,000. Entrepreneur executes a note to Sole Saver as security for the debt. This security
a. does not constitute sufficient consideration for HDC status.
b. does not satisfy the value requirement for HDC status.
c. satisfies the consideration requirement for HDC status.
d. satisfies the value requirement for HDC status.
Q:
Generally, a bank has no obligation to pay a customer's overdrafts.
Q:
A bank is subject to a civil suit if its customer writes a bad check.
Q:
A loss sustained between the time of application and the delivery of an insurance policy may not be covered.
Q:
To buy a stuffed cow, Ken executes a check "pay to Laura or bearer" and gives it to Laura, who does not own a stuffed cow. This check is
a. negotiable.
b. nonnegotiable, because it does not indicate a specific payee.
c. nonnegotiable, because it may be a joke.
d. nonnegotiable, because Laura does not own a stuffed cow.
Q:
State law may mandate that an incontestability clause be included in an insurÂance policy.
Q:
Efron transfers an instrument to First Citizens Bank. This is not a negotiation unless
a. the parties bargained over the amount paid for the instrument.
b. the transfer is an assignment.
c. the instrument is a negotiable instrument.
d. the transfer includes rights under a contract.
Q:
A bank that has certified a check is under no obligation to accept it.
Q:
An insurance application is usually not part of the insurance contract.
Q:
Fred has six nieces, ages five to sixteen. He writes an order instrument for $50 that states, "Pay to the order of my niece." The order instrument isa. negotiable.b. nonnegotiable, because the amount of money is less than $500.c. nonnegotiable, because it is illegal to write an order instrumentpayable to a relative.d. nonnegotiable, because there is no specific person identified.
Q:
Certified checks are instruments that have been accepted for payment by the institutions on which they are drawn.
Q:
A party must own property to have an insurable interest in it.
Q:
A check is a special type of certificate of deposit.
Q:
Ralph signs an instrument promising to pay a total of $10,000 to Martha in $1,000 monthly installments with the final payment being made on August 1. Ralph unexpectedly inherits $10,000 from his aunt on May Ralph may
a. not complete his $10,000 payment before August 1.
b. complete his $10,000 payment before August 1.
c. increase his monthly payments by five percent, but not more.
d. increase his monthly payments by ten percent, but not more.
Q:
A person has an insurable interest in property if he or she would sustain a financial loss from damage to the property.
Q:
UCC Articles 3 and 4 govern checks.
Q:
Maria signs an instrument payable to the order of National Loans, Inc., "on or before" June 15. This instrument is
a. negotiable.
b. nonnegotiable, because the maker can move up the payment date.
c. nonnegotiable, because moving up the payment date is optional.
d. nonnegotiable, because the exact payment date cannot be deterÂmined from the face of the instrument.
Q:
A business firm may have an insurable interest in the life of a key employee.
Q:
Tiny authorizes United Bank to make transfers from his account to make payments on his debt to Vic's Auto Dealership, which sold Tiny the car that serves as collateral for the debt. After three payments, Vic's repossesses the car and refuses to return it. Tiny phones the bank to stop the payments and follows up with a confirming letter. The bank fails to stop the next two payments, and Vic's refuses to refund anything. Can Tiny get his money from the bank? Explain.
Q:
Kris wants one of Jasmine's purebred Persian kittens. Kris signs an instrument in which she promises to pay Jasmine for a kitten. The instrument will be negotiable if it is payable in
a. goods of equal market value.
b. money.
c. any of the choices.
d. shares in stock.
Q:
A person can insure anything in which he or she has an insurable interest.
Q:
Kelly signs an instrument in favor of Leo that states it is "subject to a cerÂtain agreement between Kelly and Mona." This instruÂment is
a. negotiable.
b. nonnegotiable, because it is made subject to a separate agreement.
c. nonnegotiable, because it refers to a separate agreement.
d. nonnegotiable, because Kelly and Mona are not the same persons.
Q:
Hoppy steals two checks from Eagle Retail Stores, Inc.: a blank check and a check payable to the order of General Supplies Company (GSC), drawn on Eagle's account with First National Bank. Hoppy forges Eagle's signature on the blank check and makes it payable to himself. Hoppy forges GSC's indorsement on the back of the check payable to GSC, and adds "Pay to the order of Hoppy." At Friendly Credit, Inc., Hoppy indorses the back of both checks with his own name and gives them to Friendly for cash. Friendly does not know about the theft or the forged signatures and presents the checks to First National, which pays them. Eagle, which was not negligent, discovers the forgeries and asks First National to recredit its account. Who suffers the loss on each check?
Q:
Insurance is classified according to the amount of the payment on a claim.
Q:
Andy leases to Burgertown Franchise Corporation a 10,000 square-foot building under a written lease with a twenty-year term, rent payable anÂnually. The lease includes a clause stating that Burgertown is reÂsponsiÂble for making all necessary repairs, including rebuilding the structure after its destruction by any cause beyond Andy's control. The lease does not include a clause concerning its assignment. One day after the tenth rental payment, Burgertown, without Andy's knowledge or consent, asÂsigns its interest in the lease to Chicken Hut Restaurants, Inc. MeanÂwhile, Andy dies and Dotty inherits Andy's interest in the building. Without the knowledge or consent of either Burgertown or Chicken Hut, Dotty sells the building to Earnest Investments, Inc. The next month, the building is destroyed in the flood of a nearby river. Burgertown rebuilds it and files a suit against Earnest for the expense. Earnest responds that the lease has terminated. Is Earnest correct? If so, when did the lease termiÂnate? If not, is Earnest liable for the cost of reÂbuilding the structure? Why or why not?
Q:
Paris knowingly divulges to Media Exposure magazine information about Randy's e-money payments to City Bank. The payments were in transmission to City Bank when Paris, without the consent of Randy or City Bank, discovered and revealed them. This may be a violation of
a. the Electronic Communications Privacy Act.
b. the Federal Reserve Board's Regulation E.
c. the Right to Financial Privacy Act.
d. the Uniform Electronic Transactions Act.
Q:
Karen writes on a piece of paper, "I owe you $600," signs it, and gives it to Lou. This instrument is
a. negotiable.
b. nonnegotiable, because it does not include an express promise to pay.
c. nonnegotiable, because it does not recite any consideration.
d. nonnegotiable, because it does not state any conditions to payment.
Q:
Jai owns an orchard behind Key's house and property. The only access to the orchard is Key's driveway, which Jai uses to get to her orchard. Jai sells the orchard to Laurentz. Can Laurentz use the right-of-way across Key's property?
Q:
To borrow money to finance the start-up of his business, Bob executes an instrument in favor of City Bank. For the instruÂment to be negotiable, the signature must be
a. anywhere on the instrument.
b. anywhere on the lower half of the instrument only.
c. in the lower left-hand corner of the instrument only.
d. in the lower right-hand corner of the instrument only.
Q:
E-Bank, an online financial institution, gives financial information about Paula and other customers to a federal agency without the customers' permission. E-Bank may be liable under
a. the Federal Trade Commission Act.
b. the Financial Services Modernization Act.
c. the Right to Financial Privacy Act.
d. the Uniform Electronic Transactions Act.
Q:
Fact Pattern 19-3Mike 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.Refer to Fact Pattern 19-3. When Mike receives his National statement, he demands that the bank investigate the matter and recredit his account. The banka. 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.
Q:
Ron signs an instrument using an "R" with a circle around it. With this mark for a signature, the instrument is
a. negotiable.
b. nonnegotiable, because an initial does not state the signer's name.
c. nonnegotiable, because an initial is not a signature.
d. nonnegotiable, because a simple initial implies a lack of binding intent.