Bus Law Exam 3

Question 1

Document drawn in a special form which can be
transferred from person to person as a substitute
for money or as an instrument of credit

Answer 1

Commercial “CONSUMER” PAPER
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Negotiable Instrument

Question 2

Unconditional promise in writing made by one party to another signed by the maker engaging to pay on demand or at a particular time a particular sum of money to order or to bearer

Answer 2

PROMISSORY NOTE

Question 2

Promises to pay

Answer 2

Promissory Note
Certificate of Deposit (CDs)
Draft

Question 3

acknowledgement by a bank of receipt of money with an agreement of repayment

EXAMPLE: $1000 CD with maturity date of 01/05 and interest of 6% At maturity date bank will pay principle plus interest

Answer 3

CERTIFICATE OF DEPOSIT (CD)

Question 4

person who executes promissory note (person who makes promise a bank or person getting loan)

Answer 4

MAKER

Question 5

party to whom any negotiable instrument is made payable

Answer 5

PAYEE

Question 6

written order signed by one person requiring the person to whom it is addressed to pay a particular sum of money to order or bearer; on demand at a certain time.

Answer 6

Draft

ORDERS TO PAY

Question 7

Orders to Pay-Types

Answer 7

Check:
Certified check
Cashier's check
Bank draft
Voucher check
Traveler's check

Question 8

“ordinary check” which an official of a bank has accepted by writing across the face of the check the word “certified” and signed.
This makes the bank liable for the payment.
The drawer is released from liability

Answer 8

CERTIFIED CHECK

Question 9

Check drawn on a bank’s own funds
Signed by a responsible bank official or a cashier
Bank may use to pay its own obligation
May be used by someone in lieu of their own
personal check

Answer 9

CASHIER CHECK

Question 10

Check drawn by one bank to another
Banks will keep a portion of their funds in other banks
Bank can draw a check on these funds at will

Answer 10

BANK DRAFT

Question 11

Checks with voucher attached

Voucher lists items of an invoice being paid by check

Answer 11

VOUCHER CHECKS

Question 12

Similar to cashier’s checks
Required signature and countersignature by
purchaser

Answer 12

TRAVELERS CHECKS

Question 13

person who executes any draft or check

Answer 13

DRAWER

Question 14

person company or financial institution ordered to pay a draft or check

Answer 14

DRAWEE

Question 15

party to whom any negotiable instruments is made payable.

Person that gets the money

Answer 15

PAYEE

Question 16

REGUIREMENTS FOR NEGOTIABILITY

Answer 16

Must be in writing and signed by the maker 	Contain an unconditional order or promise to pay a
certain sum in money 
Payable on demand at a definite time 
Payable to “order” or to “bearer” 
Order paper 
Bearer paper

Question 17

A commercial paper made payable “the the order
of” some named party
Word “order” or its equivalent must be used
Order paper may be paid only to the person to whom it has been properly endorsed

Answer 17

ORDER PAPER

Question 18

A commercial paper made payable to any person in possession of it
“Payable to bearer”

Answer 18

BEARER PAPER

Question 19

TRANSFER OF NEGOTIABLE INSTRUMENTS:

Answer 19

NEGOTIATION 
HOLDER 
ENDORSEMENT 
ENDORSER 
ENDORSEE

Question 20

act of transferring ownership of a negotiable instrument to another party

Answer 20

NEGOTIATION

Question 21

person who has possession of a delivered negotiable instrument

Answer 21

HOLDER

Question 22

the signature or statement of purpose by the owner on the back of a negotiable instrument which indicates future control of the instrument

Answer 22

ENDORSEMENT
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INDORSEMENT

Question 23

the “payee” of a note or draft transferring the instrument to another party

Answer 23

ENDORSER
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INDORSER

Question 24

person who becomes the “holder” of a negotiable instrument by endorsement which names him/her as the person to whom the instrument is negotiated

Answer 24

ENDORSEE AkA INDORSEE

Question 25

TYPES OF ENDORESEMENTS:

Answer 25

```  BLANK  SPECIAL  RESTRICTIVE  QUALIFIED  HOLDER IN DUE COURSE ```

Question 26

having no words other than signature of endorser | Mary A Johnson

Answer 26

BLANK Endorsement

Question 27

endorsement which designates the particular person to whom payment is to be made (i.e. – pay to the order of)

Answer 27

SPECIAL Endorsement

Question 28

an endorsement which prevents the use of the instrument for anything except stated use (i.e. – for deposit only)

Answer 28

RESTRICTIVE Endorsement

Question 29

Limits liability of endorser. Endorser signs the bill or promissory notes and adds “without recourse”. This limits the endorser’s liability endorsee accepts the liability Endorsee accepts the liability

Answer 29

QUALIFIED Endorsement

Question 30

person in possession of a negotiable instrument who accepts the negotiable instrument in good faith and for value;

Answer 30

Innocent Purchaser | HOLDER IN DUE COURSE

Question 31

REQUIREMENTS OF HOLDER IN DUE COURSE

Answer 31

The Holder: Must take instrument in good faith and for value Must have no notice that instrument is overdue or has been dishonored At time of negotiation no notice of any defense against or adverse claim to the instrument

Question 32

RIGHT OF HOLDER IN DUE COURSE

Answer 32

Right to collect amount due | Right to be free from defense of no consideration

Question 33

LIABILITY FOR PAYMENT OF NEGOTIALE INSTRUMENT

Answer 33

Requirements to qualify as a holder in due course | Rights of a holder in due course

Question 34

TRANSFEROR’S WARRANTIES

Answer 34

Transfer of commercial paper Warrants existence of certain facts Specified by UCC Transferor entitled to enforce the instrument All signatures genuine or authorized Instrument has not been altered Instrument not subject to defense or claim of party Transferor has no knowledge or insolvency proceedings with maker acceptor or drawer unaccepted draft

Question 35

transfer of possessions but not title personal property by one party to another under agreement EXAMPLE: Leaving a car with garage for repair Storing furniture in a warehouse Student borrowing a tuxedo

Answer 35

BAILMENT

Question 36

party who gives up possession but not | of title or property

Answer 36

BAILOR

Question 37

party who acquires possession, but not | title of personal property

Answer 37

BAILEE

Question 38

those hold to “normal” standard of care for bailed property

Answer 38

ORDINARY BAILMENT

Question 39

those held to higher than normal standard of care for bailed property Common carriers Hotel keepers Funeral directors

Answer 39

EXTRAORDINARY BAILMENT

Question 40

CONDITIONS OF BAILMENT:

Answer 40

Bailor delivers property to bailee Bailee accepts property from bailor Both parties agree that property will be returned to bailor

Question 41

TYPES OF BAILMENT:

Answer 41

Sole benefit to bailor Sole benefit of bailee Mutual benefit

Question 42

SOLE BENEFIT OF BAILOR:

Answer 42

Bailment benefits only property owner Bailee must exercise “slight care” Liable only for gross negligence ``` Example You own a piano You plan to move into a new apartment You ask a friend to store your piano Your friend does not play the piano Only you benefit from the friend who stores your piano ```

Question 43

SOLE BENEFIT OF BAILEE

Answer 43

Occurs when borrowing someone’s property | Bailee must exercise “great care”

Question 44

MUTUAL BENEFIT

Answer 44

Bailee renders a service Charges for the service Bailee must exercise “reasonable care under the circumstances” Example You own a mink coat You store your coat at ABC Cleaners for the summer months Your coat is stored ABC Cleaners is paid for the storage service

Question 45

Transports under special arrangements for a fee Moving van Delivery services Funeral home A transports body for funeral home B

Answer 45

PRIVATE CARRIERS

Question 46

one that undertakes transport without discrimination for all who apply for service  Airline  Bus  Train

Answer 46

PUBLIC CARRIERS

Question 47

one who ships goods by a common carrier (i.e. - forwarding funeral home).

Answer 47

CONSIGNOR

Question 48

one to whom goods are shipped to by a common carrier

Answer 48

CONSIGNEE

Question 49

contract between consignor and carrier Is receipt and contract existing between consignor and carrier Is documentary evidence of title of goods.

Answer 49

BILL OF LADING

Question 50

BILL OF LADING ELEMENTS:

Answer 50

Describing the freight for ID States the number of the consignor The terms of the contract for carriage Directing location of delivery