Question

Carl, without Eddie's knowledge, impersonates Eddie and thereby convinces Connie, who has never seen Eddie, to write a check to Eddie. Carl forges Eddie's name on the check and deposits it into his, Carl's, account. Which of the following is true regarding whether Connie will be liable for the amount of the check?

Question 82 options:

	1) Under the forgery rule, Connie will be held liable.
	2) Under the transferor rule, Connie will be held liable.
	3) Under the payee rule, Connie will be held liable.
	4) Under the imposter rule, Connie will be held liable.
	5) Under the fictitious payee rule, Connie will not be held liable.

Question 83 (1 point)

Personal defenses to the payment of an instrument include:

Question 83 options:

	1) Breach of contract or warranty
	2) Fraud in the inducement
	3) Illegality
	4) Breach of contract or warranty, fraud in the inducement, and illegality
	5) Illegality and lack or failure of consideration, but not breach of contract or warranty

Question 84 (1 point)

When a party's liability for a negotiable instrument is terminated, this party's liability has been _____.

Question 84 options:

	1) remanded
	2) annulled
	3) discharged
	4) ratified
	5) absconded

Question 85 (1 point)

When can a transferee bring suit against a transferor for a breach of warranty regarding a negotiable instrument?

Question 85 options:

	1) As soon as a transferee discovers a breach of warranty has occurred, he or she can bring suit against the transferor.
	2) A transferee must wait at least 3 business days after he or she discovers that a breach of warranty has occurred before bringing suit against the transferor.
	3) A transferee must wait at least 5 calendar days after he or she discovers that a breach of warranty has occurred before bringing suit against the transferor.
	4) A transferee must wait at least 10 business days after he or she discovers that a breach of warranty has occurred before bringing suit against the transferor.
	5) A transferee must wait at least 30 calendar days after he or she discovers that a breach of warranty has occurred before bringing suit against the transferor.

Question 86 (1 point)

A right to _____ is the ability of a party to seek reimbursement.

Question 86 options:

	1) rescission
	2) recourse
	3) renunciation
	4) revocation
	5) recusal

Question 87 (1 point)

Hot Dress. Doreen writes a check for a dress to Hot Dresses, Inc., a small specialty shop owned primarily by Betty. Betty was getting ready to go on an extended European vacation and temporarily closed the shop the day after the dress sale to Doreen. When Betty returned, she had a number of other things to do and did not take Doreen's check and some other checks to the bank for three months. Betty was independently wealthy and only ran the shop as a hobby, so she had not been in need of funds. When Betty finally took Doreen's check to the bank, Betty requested that her bank, ABC Bank, deposit the check into her account. When ABC Bank, however, requested payment from Doreen's bank, XYZ Bank, the check was dishonored because of insufficient funds in Doreen's account. Although Betty did not particularly need the funds, she did not like to feel as if she had been cheated; therefore, she demanded that Doreen make the check good. Which of the following parties is the drawee of the check Doreen presented to Hot Dresses, Inc.?

Question 87 options:

	1) Doreen
	2) Hot Dresses, Inc.
	3) Betty, because she owns Hot Dresses, Inc.
	4) Doreen's bank
	5) Betty's bank

Question 88 (1 point)

Hot Dress. Doreen writes a check for a dress to Hot Dresses, Inc., a small specialty shop owned primarily by Betty. Betty was getting ready to go on an extended European vacation and temporarily closed the shop the day after the dress sale to Doreen. When Betty returned, she had a number of other things to do and did not take Doreen's check and some other checks to the bank for three months. Betty was independently wealthy and only ran the shop as a hobby, so she had not been in need of funds. When Betty finally took Doreen's check to the bank, Betty requested that her bank, ABC Bank, deposit the check into her account. When ABC Bank, however, requested payment from Doreen's bank, XYZ Bank, the check was dishonored because of insufficient funds in Doreen's account. Although Betty did not particularly need the funds, she did not like to feel as if she had been cheated; therefore, she demanded that Doreen make the check good. Which of the following parties is the holder of the check?

Question 88 options:

	1) Doreen
	2) Hot Dresses, Inc.
	3) Doreen's bank
	4) Betty's bank
	5) The intermediary bank that will ultimately negotiate the check from Betty’s bank to Doreen’s bank.

Question 89 (1 point)

Angry employee. Martin is in charge of payroll and other expenses for ABC, Inc. He becomes very angry with his boss Adam because Adam started dating Martin's girlfriend Stacy. Martin decided to quit but not before he got some extra money from ABC, Inc. Martin wrote five checks from the account of ABC, Inc. to pay off the five credit card companies that Martin owed money. The credit card companies took the checks without reason to be suspicious as to the source of payment. The checks to the credit card companies in total amounted to $30,000, and each check was in an amount under $10,000. Martin also made out ten checks on the account of ABC to twenty alleged employees who did not really exist. Each of these checks was in the amount of $5,000. Martin took the checks, endorsed and cashed the checks in the names of the various fake employees, and kept the cash. Finally, Martin discovers through office gossip that Adam has been looking for another job with XYZ, Inc. located in a neighboring state and that Adam is supposed to go there for an in-person interview in a few weeks. Martin sets up an interview with XYZ, Inc. pretends to be Adam, and induces XYZ, Inc. to give him, posing as Adam, a check for $5,000 as a signing bonus. Martin immediately endorses the check pretending to be Adam and pockets the cash. Finally, Martin leaves town heading for the Caribbean. Is ABC, Inc. entitled to a refund from its bank for the five checks used to pay Martin's credit card companies?

Question 89 options:

	1) Yes, ABC, Inc. is entitled to a refund because the credit card companies cannot be considered payees.
	2) Yes, ABC, Inc. is entitled to a refund because the credit card companies cannot be considered holders in due course.
	3) Yes, ABC, Inc. is entitled to a refund because the credit card companies can reverse the credits.
	4) No, ABC, Inc. is not entitled to a refund because none of the checks were in an amount over $10,000.
	5) No, ABC, Inc. is not entitled to a refund because the credit card companies are holders in due course entitled to the funds.

Question 90 (1 point)

Saved

Angry employee. Martin is in charge of payroll and other expenses for ABC, Inc. He becomes very angry with his boss Adam because Adam started dating Martin's girlfriend Stacy. Martin decided to quit but not before he got some extra money from ABC, Inc. Martin wrote five checks from the account of ABC, Inc. to pay off the five credit card companies that Martin owed money. The credit card companies took the checks without reason to be suspicious as to the source of payment. The checks to the credit card companies in total amounted to $30,000, and each check was in an amount under $10,000. Martin also made out ten checks on the account of ABC to twenty alleged employees who did not really exist. Each of these checks was in the amount of $5,000. Martin took the checks, endorsed and cashed the checks in the names of the various fake employees, and kept the cash. Finally, Martin discovers through office gossip that Adam has been looking for another job with XYZ, Inc. located in a neighboring state and that Adam is supposed to go there for an in-person interview in a few weeks. Martin sets up an interview with XYZ, Inc. pretends to be Adam, and induces XYZ, Inc. to give him, posing as Adam, a check for $5,000 as a signing bonus. Martin immediately endorses the check pretending to be Adam and pockets the cash. Finally, Martin leaves town heading for the Caribbean. Is ABC, Inc. entitled to a refund from its bank for the checks the bank paid written to fake employees?

Question 90 options:

	1) Yes, because Martin forged the names of the employees.
	2) Yes, because Martin posed as an imposter in regard to the employees.
	3) Yes, because the bank has a cause of action against Martin and can likely get a default judgment.
	4) No, because of the imposter rule.
	5) No, because of the fictitious-payee rule.

Answer 1

1. UNDER FORGERY RULE, CONNIE WILL BE HELD LIABLE
   THE FORGERY DEFINED AS THE FORGING, ALTERING, IMITATING OR CREATING OF ANY DOCUMENT WITH THE INTENT TO DEFRAUD ANOTHER PERSON. MAKING SIGNATURE AUTHORIZATION  ANOTHER PERSON TO FRAUDULENTLY SIGN A DOCUMENT ARE ALSO COVERED UNDER THIS LAW.
   
   
2. BREACH OF CONTRACT OR WARRANTY, FRAUD IN INDUCEMENT AND ILLEGALITY
   PERSONAL DEFENSES ARE GENERALLY DEFENSES APPLICABLE TO THE UNDERLYING AGREEMENTS OE BETWEEN THE ORIGINAL PARTIES TO THE UNDERLYING AGREEMENT. THE BREACH OF CONTRACT OR WARRANTY MEANS THAT ANY PARTY TO A CONTRACT WHO BREACHES THE AGREEMENT CANNOT ENFORCE THE PAYMENT OF A NEGOTIABLE INSTRUMENT ISSUED AS A PART OF THAT AGREEMENT. AS WELL AS THE FRAUD IN INDUCEMENT MEANS THAT WHEN A PARTY DEFRAUDS ANOTHER PARTY IN ORDER TO HAVE THEIR ENTER INTO THE AGREEMENT.
   
   
3.    ANNULLED
   
4. AS SOON AS A TRANSFEREE DISCOVERS A BREACH OF WARRANTY HAS OCCURED, HE CAN BRING SUIT AGAINST THE TRANSFEROR
   
5. REVOCATION
   
   
6. DOREEN
   BECAUSE HIS ACCOUNT HAS INSUFFICIENT BALANCE TO PAY AT THAT PARTICULAR TIME.
   
   
7. NO, ABC, INC IS NO ENTITLED TO A REFUND BECAUSE NONE OF THE CHECKS WERE IN AN AMOUNT OVER $10000
   
   
8. NO, BECAUSE OF THE IMPOSTER RULE
   IMPOSTER RULE IS LEGAL PRINCIPLE AFFIRMING THAT AN IMPOSTERS ENDORSEMENT OF A NEGOTIABLE INSTRUMENT IS NOT A FROGERY