Question 1

Briefly compare and contrast a postdated cheque and a staledated cheque.Can a cheque ever become both postdated and staledated?

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Question 2

Milosz is the holder in due course of a cheque that has been negotiated several times.Identify a situation in which he may be subject to the equities if he seeks to enforce the instrument against the drawer.

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Question 3

Shauna drew a cheque on her account at the Bank of Whitehorse.That cheque passed through several people before Kyle acquired possession of it.Because Shauna's account was overdrawn, the Bank of Whitehorse dishonoured the cheque when Kyle presented it for payment.Kyle realizes that there is no point in suing Shauna because she simply does not have any money.Is there anyone else to whom Kyle can look for payment? Do you require any additional information in order to fully answer this question?

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Question 4

Although you agreed to sell a widget to me, you are concerned about actually receiving payment.Discuss the main advantages and disadvantages of receiving payment from me in the form of cash or a simple cheque.

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Question 5

Francine bought a widget from Simon.In payment of the purchase price, she gave him a cheque for $10 000 drawn on her account at the Bank of Waterloo.Because Francine's account was overdrawn, the bank dishonoured the cheque when Simon presented it for payment.Identify two grounds upon which Simon can sue Francine.Briefly explain which option is easier.

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Question 6

The Bills of Exchange Act and the Sale of Goods Act both arose as codifications of judge-made rules.Furthermore, the original legislation in each case was intended to increase certainty and efficiency in the commercial world.There is, however, a major difference between the two statutes.One generally provides default rules that the parties are free to accept or reject.The other does not allow the parties to freely opt in and out of its sections.Which of the two statutes is less flexible and why?

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Question 7

Identify and briefly explain three major differences between a negotiable instrument and a regular contract.

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Question 8

What is an "acceleration clause"? When and why is such a clause inserted into a negotiable instrument?

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Question 9

Dina drew a cheque on her account at the Bank of Brockville and named Gary as the payee.What process could be used to make the cheque into "something equivalent to money"? Explain the nature and effect of that process.

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Question 10

What is the difference between a demand draft, a sight draft, and a time draft?

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Question 11

You are the manager of the York Trust Company.Nadia, one of the company's customers, has drawn a bill of exchange upon her account with the company.That bill is for $50 000 and it names Seth as the payee.The bill is due on August 31.On June 1, Seth appears at your office seeking acceptance of the bill.Describe the process and effect of acceptance.As a matter of risk management, what special precaution should you exercise if you decide to accept the bill on behalf of the trust company?

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Question 12

Krystyne bought a widget from Ryan.As payment, she gave him a cheque for $10 000 that was drawn on her account at the Bank of Windsor.Because she discovered that the widget was defective, Krystyne countermanded her cheque before Ryan presented it for payment.Due to a clerical error, the bank nevertheless honoured the cheque and paid $10 000 to Ryan.Is the bank entitled to debit Krystyne's account? Do you have enough information to answer that question?

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Question 13

Chris fraudulently induced Lucianna into drawing a cheque for $10 000.Chris then negotiated the cheque to Kenneth, who is a holder in due course.Is Kenneth entitled to receive payment on the cheque? Do you need any more information before answering that question? Explain your answer.

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Question 14

Identify two types of endorsements that may be used by a person who is not the holder of a negotiable instrument.Provide an example of each.

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Question 15

Jordan bought a widget from Sara.He paid the purchase price of $25 000 by giving her a cheque drawn upon his account at the Bank of Saskatoon.The facts involve three contracts.Identify those contracts and briefly explain the rights that each involves.

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Quiz 27: Online: Special Contracts: Negotiable Instruments