SmartBook Assignment Chapter 26
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West Texas A&M University *
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4371
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Apr 3, 2024
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SmartBook Assignment Chapter 26
A sales contract payment is typically made in one of three ways: in cash, through Credit
arrangements, or with a substitute for cash.
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Credit A negotiable instrument is a written document that is a(n) ________ promise or an order to pay a certain sum, either at a specified time or on demand.
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Unconditional Checks, certificates of deposits, drafts and promissory notes are examples of ______ instruments.
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Negotiable The term "negotiable instrument" comes from the: ______.
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Article 3 of the UCC. Uniform Commercial Code. Under the common law and Article 2 of the Uniform Commercial Code (UCC), contracts are considered: ______.
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Commercial paper. Payment in a sales contract is generally made: ______ (check all that apply.)
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Through credit arrangements
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Through a cash transaction -
Through a substitute for cash Minnie sells a handbag to Tina for $50 and, Tina executes a contract to pay Minnie $50. Minnie also owes $50 to her friend, Aliyah. Instead of returning the cash to Aliyah, Minnie assigns Tina's obligation to pay $50 to Minnie. When Aliyah asks Tina for the money, Tina refuses to pay and claims that the bag was of very poor quality and it fell apart in a day. In the context of commercial papers, who is liable to make the payment to Aliyah in the given scenario?
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Minnie, since she failed her original contract with Tina, Tina would have to sue Minnie to pay her the $50 owed. What is the term for a written document that is an unconditional promise or an order to pay a certain amount of money?
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Negotiable instrument
Which of the following are recognized under Article 3 of the Uniform Commercial Code (UCC) as negotiable instruments? (Check all that apply) -
Checks -
Certificates of deposit -
Notes Which of the following are examples of negotiated instruments? (Check all that apply.)
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Checks -
Promissory notes -
Drafts Which of the following is a promise to pay a payee? -
A Note Negotiable instruments are also known as: ______.
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Commercial paper Which of the following is an order by a drawer to a drawee to pay a payee?
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A Draft Und
er the common law and Uniform Commercial Code (UCC) Article 2, a contract is considered: ______ -
Commercial paper When can the payee (or subsequent holder) of a demand instrument demand payment?
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At any time. If an assignee of a commercial paper has a shipment of goods that is validly rejected, and the merchant refuses to pay the assignee for the goods, the assignee can sue the: _____ -
The assignor of the commercial paper What section of the Uniform Commercial Code (UCC) defines payable on demand instruments?
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3-108(a)
Identify the types of negotiable instruments that are recognized under Article 3 of the Uniform Commercial Code (UCC). (Check all that apply.)
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Drafts -
Certificates of Deposits Payment on a time instrument can be made: ______
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Only at the time determined from the document itself. Under Uniform Commercial Code (UCC) Section 3-103(a)(9), a note is a promise, by the ______ of the note, to pay a payee.
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Maker. Usually a payee who buys a(n) _____, or certificate of deposit, from a bank collects both the principal and a determined amount of interest in the future. -
CD Which of the following is correct regarding a draft? (Check all that apply.)
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Three-party instrument. -
It is an Order by a drawer to a drawee to pay a payee. A ______ is a specific draft, drawn by the owner of an account, ordering a bank to pay the payee from that drawer’s account.
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Check What type of instrument allows a payee to demand payment at any time?
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Demand instrument A check is always a ______ instrument and can never be a _____ instrument. -
Demand, time. The Uniform Commercial Code (UCC) defines a "payable on demand" instrument as
one that: ______. (Check all that apply.)
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Payable on demand or at sight -
Does not state any time of payment Which of the following are valid types of checks recognized by the Uniform Commercial Code (UCC)? (Check all that apply.)
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Cashiers check -
Traveler’s check -
Certified check
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Payment on a time instrument can only be made at what time?
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At a specific future time. True or false: Even if an instrument fails to qualify as a negotiable instrument, it can still be enforceable as a contract.
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True What is the term for a promise by a bank to pay a payee a certain amount of money at a future time?
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Certificate of deposit. Negotiable instruments are negotiated to a(n): ______ -
Holder A check is a specific type of: ______ -
Draft. A check must always be what type of instrument?
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A demand instrument. Identify the requirements of contracts that negotiable instruments lack. (Check all that apply.)
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Consideration -
Acceptance -
Offer Which of the following is not a type of check recognized by the Uniform Commercial Code (UCC)?
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Tertiary check Uniform Commercial Code (UCC) 3-104(a) outlines how many requirements that must be satisfied for an instrument to be considered negotiable?
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7 Which of the following is correct regarding an instrument that fails to qualify as a negotiable instrument? (Check all that apply.)
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It means that the special rules regarding negotiable instruments do not apply. -
It can be enforced as a contract.
Would an oral negotiable instrument be recognized and enforced by a court of law?
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No, since the law does not permit oral negotiable instruments. Simple contracts are assigned to a(n)______ while negotiable instruments are negotiated to a(n) _______.
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Assignee; holder A ______ is a specific draft, drawn by the owner of an account, ordering a bank to pay the payee from that drawer’s account.
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Simple contracts are assigned to an assignee. While negotiable instruments are negotiated to a holder. A holder and an assignee differ because a negotiable instrument gives greater rights
to the holder than the transferor. Negotiable instruments lack the requirements of contracts: consideration and both offer and acceptance.
A check is a special draft that orders a bank (the drawee) to pay a specified sum of money to the payee from the drawer’s account. -
Check When comparing negotiable instruments with contracts, their requirements are: ___
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Different, since negotiable instruments do not have the formal requirements of contracts.
Which of the following are requirements for an instrument to be considered negotiable according to the Uniform Commercial Code (UCC)? (Check all that apply.)
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It must specify payment either on demand or at a fixed future time -
It must be a written document -
It must contain reference to a fixed sum of money What characteristics must a written document have to be a valid negotiable instrument? (Check all that apply.)
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Movability -
Relative permanence The law does not permit a(n) ______ negotiable instrument. -
Oral What affirmative marks are allowed as signatures for a negotiable instrument? (Check all that apply.)
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A full signature by the signee -
An X placed by the signee Negotiable instruments are negotiated to a(n): _______
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Holder A check is a specific type of: _______
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Draft. According to the Uniform Commercial Code (UCC), a signature for a negotiable instrument may be made: ______ (check all that apply.) -
Manually by hand -
By use of a device or machine Identify the requirements of contracts that negotiable instruments lack. (Check all that apply.)
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Offer -
Consideration -
Acceptance. Would a handwritten negotiable instrument be valid and enforceable?
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Yes, a handwritten instrument even without a signature would be enforceable.
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A written document that is a valid negotiable instrument must have relative permanence and __Movability_____
Which of the following is essential for a promise to pay to become a negotiable instrument?
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The use of affirmative language. Identify the conditions that must be met for an X mark to be acceptable on a negotiable instrument. (Check all that apply.)
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The party uses that mark to identify himself or herself. -
The party intended that the mark be placed on the instrument. Uniform Commercial Code (UCC) 3-104(a) states that negotiable instruments must promise or order that payment be made in: _______
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National currency Simple contracts are assigned to a(n)
______, while negotiable instruments are negotiated to a(n) ______. -
Assignee; holder When computing the specific time at which a negotiable instrument must be paid, the parties are required to: _____
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Look for the specific time within the instrument itself. The Uniform Commercial Code (UCC) allows an individual to authenticate a negotiable instrument:
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By drawing a mark on the document -
By drawing a symbol on the document ______ instruments, such as checks, are payable as soon as they are issued. -
Demand In which of the following situation is the requirement for signature satisfied without a formal signature?
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If the instrument is handwritten
Which of the following is a phrase in an instrument that indicates an intent to transfer to a payee?
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“Pay to the order of”
Generally, a promise or order to pay must be:
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Specified Endorsing a check changes that document into what type of instrument?
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A bearer instrument Negotiable instruments must promise or order payment to be made in:
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A national currency What is the primary reason transacting with negotiable contracts is difficult in international transactions?
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Different definitions of negotiable contracts. If a negotiable instrument states a specific date, it is a(n) ______ instrument. -
Time certain If an instrument is silent as to the time of payment, the Uniform Commercial Code (UCC) presumes it is: ______
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A demand instrument A negotiable instrument must indicate that it was created for the purpose of: ____ -
Being transferred Which of the following statements are true regarding a bearer instrument? (Check all that apply.)
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Any person who is in possession of the instrument can claim the payment -
It is treated like cash. True or false: The definition of a negotiable contract is the same from country to country.
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False