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Homework answers / question archive / East Mississippi Community College ECON 2123 Chapter 29-TRANSFERS OF NEGOTIABLE INSTRUMENTS AND WARRANTIES OF PARTIES TRUE/FALSE 1)An instrument may be transferred by negotiation or by assignment

East Mississippi Community College ECON 2123 Chapter 29-TRANSFERS OF NEGOTIABLE INSTRUMENTS AND WARRANTIES OF PARTIES TRUE/FALSE 1)An instrument may be transferred by negotiation or by assignment

Economics

East Mississippi Community College

ECON 2123

Chapter 29-TRANSFERS OF NEGOTIABLE INSTRUMENTS AND WARRANTIES OF PARTIES

TRUE/FALSE

1)An instrument may be transferred by negotiation or by assignment.

 

                                           

 

  1. When a negotiable instrument is assigned, the transferee has the rights of the transferor.

 

                                           

 

  1. When a negotiable instrument is transferred by negotiation, the transferee is recognized as the holder of the instrument.

 

                                           

 

  1. An instrument that originally was bearer paper always remains bearer paper.

 

                                           

 

  1. The order or bearer character of a paper is determined as of the time when the negotiation is about to take place.

 

                                           

 

  1. Order paper is negotiated by the indorsement of the holder and delivery.

 

                                           

 

  1. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.

 

                                           

 

  1. A thief or an embezzling officer cannot legally transfer title to a bearer instrument.

 

                                           

 

  1. Endorsements may be classified in terms of whether the indorser has added any words to the endorsement and what those words are.

 

                                           

 

  1. A blank endorsement indicates the person to whom the instrument is to be paid-that is, the transferee.

 

                                           

 

  1. A person who acquires the instrument on which the last endorsement is blank becomes the holder.

 

                                           

 

  1. Order paper can be converted into bearer paper by the holder's blank endorsement.

 

                                           

 

  1. When a special endorsement is made, the instrument becomes order paper and may be negotiated only by an endorsement and delivery.

 

                                           

 

  1. A special endorsement consists of the signature of the indorser and the words identifying the person to whom the indorser makes the instrument payable.

 

                                           

 

  1. An endorsement "Pay to Donald Hames, Cathy Dukes" is not valid as an endorsement because it does not contain the words "order" or "bearer."

 

                                           

 

  1. A qualified endorsement qualifies the effect of a blank or special endorsement by disclaiming or destroying the liability of the indorser to answer for the default of the maker or drawee.

 

                                           

 

  1. A restrictive endorsement specifies the purpose of the endorsement or the use to be made of the paper.

 

                                           

 

  1. If an instrument bears a restrictive endorsement, any further transfer or negotiation is effectively barred.

 

                                           

 

  1. A payee or endorsee whose name is misspelled may endorse the wrong name, the correct name, or both.

 

                                           

 

  1. When the holder fails to endorse order paper but does physically transfer the paper to a third party, the transferee is considered an assignee not a holder.

 

                                           

 

  1. A restrictive indorsement reduces the risk of theft or unauthorized transfer by eliminating the bearer quality of a blank indorsement.

 

                                           

 

  1. If an instrument is payable to alternative payees or if it has been negotiated to alternative indorsees, it

 

may be indorsed and delivered by either of them.

 

                                           

 

  1. If an instrument is drawn in favor of an officer of a named corporation, the instrument is payable to the corporation, the officer, or any successor to such officer.

 

                                           

 

  1. Under the UCC, a negotiation is not effective when it is made by a minor or any other person lacking capacity.

 

                                           

 

  1. It is worse for the holder to lose order paper than to lose bearer paper.

 

                                           

 

  1. If a lost negotiable instrument is in bearer form at the time of the loss, the finder is entitled to enforce payment.

 

                                           

 

  1. The warranties made by an unqualified indorser guarantee that payment of the instrument will be made.

 

                                           

 

  1. Thomas, the holder of a check, presents it to the drawee bank for payment. If Thomas endorses the check, Thomas warrants that the account of the drawer in the drawee bank contains funds sufficient to cover the check.

 

                                           

 

  1. To enforce an implied warranty of an indorser, the party claiming under the warranty must give the indorser notice of the breach within fourteen (14) days after the claimant learns or has reason to know of the breach and the identity of the indorser.

                                           

 

  1. When a negotiable instrument is negotiated by delivery without indorsement, the warranty liability of the transferor runs only to the immediate transferee.

 

                                           

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