Question 1

The difference between a cheque and draft is that

Accepted Answer

A)  the drawee on a cheque is a bank or financial institution,whereas the drawee of a draft may be a financial institution or bank.
B)  a cheque is a bill of exchange drawn against a bank that is payable on demand,whereas a draft is not payable on demand.
C)  a cheque is a bill of exchange drawn against a person that is payable on demand,whereas a draft is drawn against a financial institution.
D)  a cheque is not a negotiable instrument,whereas a draft is a negotiable instrument.
E)  a cheque is a bill of exchange,whereas a draft is not a bill of exchange.F) A) and C)
G) None of the above A

Question 2

Tina gave Zach a cheque for $1000 to pay for a TV.Zach took the cheque to Cash Mart,he endorsed it,and Cash Mart paid him $950.Cash Mart is a holder in due course of a negotiable instrument.

Accepted Answer

A) True 
 B)False  True

Question 3

Explain why putting a stop payment on a cheque may not be binding on a bank.

Accepted Answer

This is because the relationship between...

Question 4

Presentment of a bill is necessary where the bill of exchange is payable at sight,or after sight,because there is the need to determine the time at which payment is due.

Accepted Answer

A) True 
 B)False

Question 5

Explain the difference between a bearer instrument and an order instrument.

Accepted Answer

A bearer instrument is one that is payab...

Question 6

Where a bill of exchange is payable at sight,or after sight,presentment is necessary.

Accepted Answer

A) True 
 B)False

Question 7

The two classes of negotiable instruments are

Accepted Answer

A)  promissory notes and drafts.
B)  promissory notes and cheques.
C)  those governed by the Bills of Exchange Act and those governed by other statutes and other laws.
D)  sight drafts and time drafts.
E)  those governed by the Bills of Exchange Act and share certificates.F) A) and B)
G) C) and E)

Question 8

Jack provides James with a cheque in payment for the delivery of goods.Later,when Jack checks the goods,he realizes that James has delivered the wrong goods.Jack wishes to cancel the cheque.Jack may go to the bank and request a

Accepted Answer

A)  cancel document.
B)  negotiable instrument.
C)  de-certification order
D)  stop payment order.
E)  stop payee document.F) A) and B)
G) A) and C)

Question 9

Sight drafts can be used as collection devices.

Accepted Answer

A) True 
 B)False

Question 10

Negotiable instruments are different from other contracts.Explain this difference.

Accepted Answer

The transfer of negotiable instruments i...

Question 11

Liability of the drawer,acceptor,or maker on a bill of exchange is dependent on

Accepted Answer

A)  the delivery of the bill.
B)  the negotiation of the bill.
C)  the presentment of the bill.
D)  the signing of the bill.
E)  the signing and delivery of the bill.F) B) and E)
G) B) and D)

Question 12

Explain the effect of certification of a cheque.

Accepted Answer

Certification is an undertakin...

Question 13

Certification is an undertaking by the bank to pay the amount of the cheque to the drawer when it is presented for payment.

Accepted Answer

A) True 
 B)False

Question 14

Delivery of a bill may be actual or constructive.

Accepted Answer

A) True 
 B)False

Question 15

What is a time draft?

Accepted Answer

A time draft is a bill of exch...

Question 16

Which of the following defences is available to the drawer of a cheque who is being sued by a holder in due course of a negotiable instrument?

Accepted Answer

A)  The cheque was obtained through breach of contract.
B)  The payee was negligent.
C)  The drawer's signature was a forgery.
D)  The cheque was obtained through misrepresentation.
E)  A and BF) A) and B)
G) B) and E)

Question 17

Explain the purposes of endorsement.

Accepted Answer

An endorsement is a means to carrying out the following purposes: transferring title to an instrument that is payable to order;giving increased security to the payee or subsequent holder;identifying the party who is entitled to payment;and acknowledging partial payment.

Question 18

On the death of a maker or acceptor of a bill of exchange,her or his liability passes to her or his personal representatives.

Accepted Answer

A) True 
 B)False

Question 19

Negotiable instruments began as a form of bill of exchange.

Accepted Answer

A) True 
 B)False

Question 20

A minor who makes a cheque payable to a holder is always liable to the holder.

Accepted Answer

A) True 
 B)False

Exam 19: Negotiable Instruments

The difference between a cheque and draft is that

Correct AnswerverifiedA

Tina gave Zach a cheque for $1000 to pay for a TV.Zach took the cheque to Cash Mart,he endorsed it,and Cash Mart paid him $950.Cash Mart is a holder in due course of a negotiable instrument.

Correct AnswerverifiedTrue

Explain why putting a stop payment on a cheque may not be binding on a bank.

Correct AnswerverifiedThis is because the relationship between...View AnswerShow Answer

Presentment of a bill is necessary where the bill of exchange is payable at sight,or after sight,because there is the need to determine the time at which payment is due.

Correct AnswerverifiedShow Answer

Explain the difference between a bearer instrument and an order instrument.

Correct AnswerverifiedA bearer instrument is one that is payab...View AnswerShow Answer

Where a bill of exchange is payable at sight,or after sight,presentment is necessary.

Correct AnswerverifiedShow Answer

The two classes of negotiable instruments are

Correct AnswerverifiedShow Answer

Jack provides James with a cheque in payment for the delivery of goods.Later,when Jack checks the goods,he realizes that James has delivered the wrong goods.Jack wishes to cancel the cheque.Jack may go to the bank and request a

Correct AnswerverifiedShow Answer

Sight drafts can be used as collection devices.

Correct AnswerverifiedShow Answer

Negotiable instruments are different from other contracts.Explain this difference.

Correct AnswerverifiedThe transfer of negotiable instruments i...View AnswerShow Answer

Liability of the drawer,acceptor,or maker on a bill of exchange is dependent on

Correct AnswerverifiedShow Answer

Explain the effect of certification of a cheque.

Correct AnswerverifiedCertification is an undertakin...View AnswerShow Answer

Certification is an undertaking by the bank to pay the amount of the cheque to the drawer when it is presented for payment.

Correct AnswerverifiedShow Answer

Delivery of a bill may be actual or constructive.

Correct AnswerverifiedShow Answer

What is a time draft?

Correct AnswerverifiedA time draft is a bill of exch...View AnswerShow Answer

Which of the following defences is available to the drawer of a cheque who is being sued by a holder in due course of a negotiable instrument?

Correct AnswerverifiedShow Answer

Explain the purposes of endorsement.

Correct AnswerverifiedAn endorsement is a means to carrying out the following purposes: transferring title to an instrument that is payable to order;giving increased security to the payee or subsequent holder;identifying the party who is entitled to payment;and acknowledging partial payment.

On the death of a maker or acceptor of a bill of exchange,her or his liability passes to her or his personal representatives.

Correct AnswerverifiedShow Answer

Negotiable instruments began as a form of bill of exchange.

Correct AnswerverifiedShow Answer

A minor who makes a cheque payable to a holder is always liable to the holder.

Correct AnswerverifiedShow Answer

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A

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True

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This is because the relationship between...
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A bearer instrument is one that is payab...
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The transfer of negotiable instruments i...
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Certification is an undertakin...
View Answer

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A time draft is a bill of exch...
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An endorsement is a means to carrying out the following purposes: transferring title to an instrument that is payable to order;giving increased security to the payee or subsequent holder;identifying the party who is entitled to payment;and acknowledging partial payment.

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