Which of the following is true about the assignment and the negotiation of a negotiable instrument?
A) An assignment does not require a signature, while a negotiation does.
B) A negotiation results in a transfer of rights, but an assignment does not.
C) An assignment applies to bearer paper, and a negotiation applies to order paper.
D) An assignment can transfer no greater rights than those held by the transferor, while the transferee in a negotiation can receive greater rights than those held by the transferor.
E) The rights acquired by subsequent transferees may not vary according to the method of transfer.

Question

Quizplus · Accepted Answer

An assignment can transfer no greater rights than those held by the transferor, while the transferee in a negotiation can receive greater rights than those held by the transferor. This is because negotiation involves the transfer of possession, which gives the transferee rights to the instrument that may be superior to those of the transferor. Choice A is incorrect because both assignment and negotiation may require a signature depending on the circumstances. Choice B is incorrect because both assignment and negotiation involve a transfer of rights, but the extent of the transfer may vary. Choice C is incorrect because both assignment and negotiation apply to both bearer paper and order paper depending on the circumstances. Choice E is incorrect because the method of transfer can affect the rights acquired by subsequent transferees, as explained in choice D.

Which of the Following Is True About the Assignment and the Negotiation