Question 1

A signature on a negotiable instrument cannot be made by a device, such as a rubber stamp or a thumbprint.

Accepted Answer

A signature on a negotiable instrument can be made by a device, such as a rubber stamp or a thumbprint, as long as it is intended to authenticate the instrument.

Question 2

An instrument that promises to pay "in goods" can be negotiable.

Accepted Answer

False

Question 3

A symbol can serve as a valid signature.

Accepted Answer

A symbol, such as a person's initials or even a unique mark or design, can serve as a valid signature as long as it is legally recognized as such.

Question 4

To be negotiable, an instrument cannot be portable.

Accepted Answer

Negotiability and portability are two different concepts. An instrument can be negotiable and portable at the same time. For example, a check is both negotiable (meaning it can be transferred to another person) and portable (meaning it can be physically carried around).

Question 5

On a cashier's check, the drawer is also always the payee.

Accepted Answer

On a cashier's check, the drawer is the bank or financial institution issuing the check, while the payee is the person or entity to whom the check is paid.

Question 6

With respect to negotiability, the location of a signature on a document is important.

Accepted Answer

The answer of With respect to negotiability, the location of...

Question 7

A holder is any person in possession of a negotiable instrument that is payable either to the bearer or to an identified person who is the person in possession.

Accepted Answer

A holder can be any person who has possession of a negotiable instrument that is payable either to the bearer or an identified person who is currently in possession.

Question 8

With respect to negotiability, a mere reference to another writing or record makes a promise conditional.

Accepted Answer

The answer of With respect to negotiability, a mere reference...

Question 9

A instrument "payable to the order of bearer" is neither an order instrument nor a bearer instrument.

Accepted Answer

A instrument "payable to the order of bearer" is considered a bearer instrument, as it is payable to whoever physically holds the instrument, regardless of whether or not they are the named payee.

Question 10

To be negotiable, an instrument must be in writing.

Accepted Answer

According to the Uniform Commercial Code, negotiable instruments must be in writing.

Question 11

An instrument is nonnegotiable unless the word "negotiable" is printed on it.

Accepted Answer

An instrument is negotiable unless there are words restricting its negotiation. If the word "non-negotiable" is printed on the instrument, then it cannot be negotiated.

Question 12

An extension clause allows a payee or other holder of a time instrument to demand payment of the entire amount due, with interest, if a certain event occurs.

Accepted Answer

An extension clause allows the maturity date of a time instrument to be extended, not to demand full payment.

Question 13

A sight draft may be payable on acceptance.

Accepted Answer

A sight draft may be payable on acceptance, meaning the drawee agrees to pay the amount of the draft upon acceptance.

Question 14

With respect to negotiability, an order on an instrument may be addressed to one person or to more than one person, either jointly or alternatively.

Accepted Answer

This statement is true. An order on an instrument can be addressed to one person or multiple persons, either jointly (meaning they must all endorse the instrument together) or alternatively (meaning any one of them can endorse the instrument). This is one of the characteristics of negotiable instruments.

Question 15

The checks that you wrote are negotiable instruments that act as substitutes for cash.

Accepted Answer

Checks are considered negotiable instruments and can be used as a substitute for cash as they represent a promise to pay a certain amount of money to the recipient.

Question 16

All checks are time instruments.

Accepted Answer

Not all checks are time instruments; some are demand instruments, payable upon presentation.

Question 17

To be negotiable, an instrument must be payable on demand.

Accepted Answer

An instrument can be negotiable even if it is payable at a future date, as long as the date is certain or determinable. Therefore, it does not need to be payable on demand in order to be negotiable.

Question 18

To be negotiable, an instrument must be payable in money.

Accepted Answer

According to the Uniform Commercial Code (UCC) of the United States, negotiable instruments must be payable in money or other medium of exchange, such as certain types of digital currency.

Question 19

An order instrument must identify the payee with certainty.

Accepted Answer

An order instrument, such as a check, requires the payee to be identified with certainty in order for the payment to be made to the correct person or entity. This helps to prevent fraud or errors in payment.

Question 20

On a certificate of deposit, the bank is the maker and the depositor is the payee.

Accepted Answer

The answer of On a certificate of deposit, the bank...

Quiz 25: The Function Creation of Negotiable Instruments