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WGU C713 BUSINESS LAW EXAM EXAM 2 VERSIONS
(VERSION A AND B) COMPLETE 400 QUESTIONS WITH
DETAILED VERIFIED ANSWERS /ALREADY GRADED A+
Define and describe "negotiation." - ANSWER ✔✔-negotiation is the transfer of an instrument in such
form that the transferee becomes a holder
requires both delivery and indorsement
What are the two methods of negotiation? - ANSWER ✔✔-order instrument or a bearer instrument.
Order Instrument
contains the name of a payee capable of indorsing, as in "Pay to the order of Jamie Fowler.
Bearer Instrument
negotiated by delivery—that is, by transfer into another person's possession. Indorsement is not
necessary
What as an "endorsement?" - ANSWER ✔✔-a signature with or without additional words or statements.
Most often written on the back.
If there is no room on the instrument, the endorsement can be written on a separate piece of paper (called
an allonge)
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A person who transfers a note or a draft by signing (endorsing) it and delivering it to another person is
an endorser. The person to whom the check is endorsed and delivered is the endorsee.
Differentiate between blank, special, qualified, and restrictive endorsements. - ANSWER ✔✔-A blank
endorsement does not specify a particular indorsee and can consist of a mere signature.
An order instrument indorsed in blank becomes a bearer instrument and can be negotiated by delivery
alone
A special endorsement contains the signature of the endorser and identifies the person to whom the
indorser intends to make the instrument payable—that is, it names the endorsee. An order instrument
unqualified endorsements. In other words, the endorser is guaranteeing payment of the instrument in
addition to transferring title to it.
An indorser who does not wish to be liable on an instrument can use a qualified indorsement to disclaim
this liability [UCC 3-415(b)]. The notation "without recourse" is commonly used to create a qualified
indorsement.
A restrictive indorsement requires the indorsee to comply with certain instructions regarding the funds
involved but does not prohibit further negotiation of the instrument
Describe some of the common endorsement problems. - ANSWER ✔✔-1. Misspelled Names
2. Instruments can be payable to Entities
3. Alternative or Joint Payees-requires endorsement of only one of the payees
Crafted for Academic Insight by ©Olivia GreenWays 2025. All rights reserved.
,3|Page
Differentiate between a holder and a holder in due course (HDC). - ANSWER ✔✔-When an instrument is
transferred, an ordinary holder obtains only those rights that the transferor had in the instrument.
holder in due course (HDC) takes an instrument free of most of the defenses and claims that could be
asserted against the transferor.
What are the three requirements for holder in due course (HDC)? - ANSWER ✔✔-1. for value
2. in good faith
3. without notice that it is defective (such as when the instrument is overdue, dishonored, irregular, or
incomplete)
Describe the "Shelter Principle." - ANSWER ✔✔-The principle that the holder of a negotiable instrument
who cannot qualify as a holder in due course (HDC), but who derives his or her title through an HDC,
acquires the rights of an HDC.
Anyone, no matter how far removed from an HDC, who can ultimately trace her or his title back to an
HDC comes within the shelter principle. The idea is based on the legal theory that the transferee of an
instrument receives at least the rights that the transferor had.
Limitations if fraud is involved.
Define "Deceptive Advertising. - ANSWER ✔✔-occurs if a reasonable consumer would be misled by the
advertising claim.
Explain how online deceptive advertising is monitored. - ANSWER ✔✔-The FTC actively monitors online
advertising and has identified hundreds of Web sites that have made false or deceptive claims for
products.
Crafted for Academic Insight by ©Olivia GreenWays 2025. All rights reserved.
, 4|Page
The FTC has issued guidelines to help online businesses comply with existing laws prohibiting deceptive
advertising
Describe the actions that can be taken by the FTC - ANSWER ✔✔-1. Formal Complaint
2. Cease and desist order
3. Counteradvertising-correct earlier false claims that were made about a product
4. Multiple product order-requires a firm to stop false advertising for all of its products.
5. Restitution
Describe the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994. - ANSWER ✔✔-
Directed to FTC to establish rules governing telemarketing and to bring actions against fraudulent
telemarketers
labeling and packaging laws: The Energy Policy and Conservation Act of 1975 - ANSWER ✔✔-Requires
automakers to attach an information label to every new car. The label must include the Environmental
Protection Agency's fuel economy estimate for the vehicle.
In general, labels must be accurate, and they must use words that are easily understood by the ordinary
consumer. In some instances, labels must specify the raw materials used in the product, such as the
percentage of cotton, nylon, or other fiber used in a garment.
What is the Fair Packaging and Labeling Act? - ANSWER ✔✔-1. Requires that labels identify:
a. The product
b. The net quantity of the contents(#of servings & size of serving)
Crafted for Academic Insight by ©Olivia GreenWays 2025. All rights reserved.
WGU C713 BUSINESS LAW EXAM EXAM 2 VERSIONS
(VERSION A AND B) COMPLETE 400 QUESTIONS WITH
DETAILED VERIFIED ANSWERS /ALREADY GRADED A+
Define and describe "negotiation." - ANSWER ✔✔-negotiation is the transfer of an instrument in such
form that the transferee becomes a holder
requires both delivery and indorsement
What are the two methods of negotiation? - ANSWER ✔✔-order instrument or a bearer instrument.
Order Instrument
contains the name of a payee capable of indorsing, as in "Pay to the order of Jamie Fowler.
Bearer Instrument
negotiated by delivery—that is, by transfer into another person's possession. Indorsement is not
necessary
What as an "endorsement?" - ANSWER ✔✔-a signature with or without additional words or statements.
Most often written on the back.
If there is no room on the instrument, the endorsement can be written on a separate piece of paper (called
an allonge)
Crafted for Academic Insight by ©Olivia GreenWays 2025. All rights reserved.
,2|Page
A person who transfers a note or a draft by signing (endorsing) it and delivering it to another person is
an endorser. The person to whom the check is endorsed and delivered is the endorsee.
Differentiate between blank, special, qualified, and restrictive endorsements. - ANSWER ✔✔-A blank
endorsement does not specify a particular indorsee and can consist of a mere signature.
An order instrument indorsed in blank becomes a bearer instrument and can be negotiated by delivery
alone
A special endorsement contains the signature of the endorser and identifies the person to whom the
indorser intends to make the instrument payable—that is, it names the endorsee. An order instrument
unqualified endorsements. In other words, the endorser is guaranteeing payment of the instrument in
addition to transferring title to it.
An indorser who does not wish to be liable on an instrument can use a qualified indorsement to disclaim
this liability [UCC 3-415(b)]. The notation "without recourse" is commonly used to create a qualified
indorsement.
A restrictive indorsement requires the indorsee to comply with certain instructions regarding the funds
involved but does not prohibit further negotiation of the instrument
Describe some of the common endorsement problems. - ANSWER ✔✔-1. Misspelled Names
2. Instruments can be payable to Entities
3. Alternative or Joint Payees-requires endorsement of only one of the payees
Crafted for Academic Insight by ©Olivia GreenWays 2025. All rights reserved.
,3|Page
Differentiate between a holder and a holder in due course (HDC). - ANSWER ✔✔-When an instrument is
transferred, an ordinary holder obtains only those rights that the transferor had in the instrument.
holder in due course (HDC) takes an instrument free of most of the defenses and claims that could be
asserted against the transferor.
What are the three requirements for holder in due course (HDC)? - ANSWER ✔✔-1. for value
2. in good faith
3. without notice that it is defective (such as when the instrument is overdue, dishonored, irregular, or
incomplete)
Describe the "Shelter Principle." - ANSWER ✔✔-The principle that the holder of a negotiable instrument
who cannot qualify as a holder in due course (HDC), but who derives his or her title through an HDC,
acquires the rights of an HDC.
Anyone, no matter how far removed from an HDC, who can ultimately trace her or his title back to an
HDC comes within the shelter principle. The idea is based on the legal theory that the transferee of an
instrument receives at least the rights that the transferor had.
Limitations if fraud is involved.
Define "Deceptive Advertising. - ANSWER ✔✔-occurs if a reasonable consumer would be misled by the
advertising claim.
Explain how online deceptive advertising is monitored. - ANSWER ✔✔-The FTC actively monitors online
advertising and has identified hundreds of Web sites that have made false or deceptive claims for
products.
Crafted for Academic Insight by ©Olivia GreenWays 2025. All rights reserved.
, 4|Page
The FTC has issued guidelines to help online businesses comply with existing laws prohibiting deceptive
advertising
Describe the actions that can be taken by the FTC - ANSWER ✔✔-1. Formal Complaint
2. Cease and desist order
3. Counteradvertising-correct earlier false claims that were made about a product
4. Multiple product order-requires a firm to stop false advertising for all of its products.
5. Restitution
Describe the Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994. - ANSWER ✔✔-
Directed to FTC to establish rules governing telemarketing and to bring actions against fraudulent
telemarketers
labeling and packaging laws: The Energy Policy and Conservation Act of 1975 - ANSWER ✔✔-Requires
automakers to attach an information label to every new car. The label must include the Environmental
Protection Agency's fuel economy estimate for the vehicle.
In general, labels must be accurate, and they must use words that are easily understood by the ordinary
consumer. In some instances, labels must specify the raw materials used in the product, such as the
percentage of cotton, nylon, or other fiber used in a garment.
What is the Fair Packaging and Labeling Act? - ANSWER ✔✔-1. Requires that labels identify:
a. The product
b. The net quantity of the contents(#of servings & size of serving)
Crafted for Academic Insight by ©Olivia GreenWays 2025. All rights reserved.
