Business Law, 8e: Chapter 23

Chapter 23
Negotiables: Liability and Discharge:

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1. A check returned for insufficient funds is considered dishonored.: a. True
b. False

2. The drawee may vary the terms of the draft in making an acceptance if the variation is made in good faith.: a. True
b. False

4. Once a check has been certified, the holder does not need to present it in order to receive payment.: a. True
b. False

5. When presentment is made by mail, presentment occurs when the mail is sent.: a. True
b. False

6. When a drawee signs a check or a draft, the drawee agrees to honor the instrument as presented.: a. True
b. False

7. If a primary party dishonors an instrument improperly, all secondary parties are discharged from liability.: a. True
b. False

8. Only the presenter of a negotiable instrument gives presentment warranties to the primary party.: a. True
b. False

9. Generally, a proper tender of payment operates as a discharge of any indorser of the instrument, whether the payment is accepted or refused.: a. True
b. False

10. Dishonor is a refusal to accept or to pay a negotiable instrument upon proper presentment.: a. True
b. False

11. The following sequence of events took place in Rhode Island: On July 3, Moody wrote a check for $3,000, drawn on the Quahog National Bank (QNB) to Jennings. On July 17, Moody delivered the check to Jennings. On Friday, July 21, Jennings negotiated the check to the order of Boyd. On Wednesday, July 26, Boyd negotiated the check to White. When must White present the check to QNB, in order to be able to hold Moody liable for that particular check in case of dishonor?: a. Within 7 days of July 26.
b. Within 30 days of July 17.
c. Within 90 days of July 3.
d. Within 90 days of July 17.

12. When does primary liability come into existence on a check?: a. Upon issue.
b. Upon acceptance.
c. Upon notice.
d. Upon presentment.

13. Who is the primary party on a negotiable draft?: a. The indorser.
b. The payee.
c. The drawer.
d. The drawee.

14. A holder presented a draft to the drawee for acceptance, alone. How long may the drawee wait to decide whether to accept before the delay is deemed a dishonor?: a. Until the close of business the day of presentment.
b. Until the close of business the third business day after presentment.
c. Until the close of business the next business day after presentment.
d. Until midnight of the day of presentment.

15. Which of the following parties would not face potential secondary liability on a dishonored instrument?: a. An accommodation indorser.
b. A guarantor.
c. A payee.
d. A drawee.