LAW OF COMMERCIAL TRANSACTIONS FINAL EXAM |
2025/2026 UPDATE | QUESTIONA AND ANSWERS |
WITH COMPLETE SOLUTION
What does article 2 apply to? Answer - The passing of title for a price of a
tangible movable thing
Negotiable Instrument Requirements (Front Check) (Article 3) Answer -
Written
Signed by Maker/Drawer
Unconditional Promise or Order to Pay
Fixed Amount of Money
Payable on Demand or at Definite Time
Payable to Order or to Bearer
Written Answer - Must be on permanent and portable material
Signed by Maker/Drawer Answer - Where they sign does not matter, just as
long as the signature is there.
Unconditional Promise or Order to Pay Answer - Looking for buzz words like
"subject to" or "pay to the order of"
If there are two names and it doesn't say "and" then its "or"
,Fixed Amount of Money Answer - Interest payments do not matter
Must involve actual money; gold does not count
Payable on Demand or at a Definite Time Answer - If it does not have a date
then it is payable on demand (checks are always considered payable on
demand)
Demand - Demand instrument, checks
Definite Time - On Nov. 5th 2017, on or before Nov. 5th 2017, on or before the
starting date of the Olympics
Acceleration Clauses - can request entire amount owed b/c of an event like
missed payments
Extension Clauses - when given the right to postpone payment
Payable to Order or to Bearer Answer - Dependent on whether or not a name
is given
If there is a named payee then you must see the words "order" or "bearer"
Order Instruments Answer - Must be payable to the named payee who is real.
Must have "pay to order" or "subject to"
Bearer Instruments Answer - When it states pay cash or pay to the order of
cash
When no REAL name is given; Pay to Mickey Mouse, pay to a stupid idiot, etc.
- Payable to fake person? Bearer Instrument
, - Payable to fake entity? Neither bearer or order instrument; not a negotiable
instrument at all
Holder Answer - Any person in the possession of an instrument drawn, issued,
or indorsed to him or her, to his or her order, to bearer, or in blank.
Types of Negotiable Instruments Answer - Orders to Pay
- Drafts
- Checks
Promises to Pay
-Notes
-Certificates of Deposits (CDs)
A ___________ is an unconditional written order that involves three parties.
The party creating the draft (_____________) orders another party
(_______________) to pay money, usually to a third party (_______________).
The most common type of draft is a check, but drafts other than checks may be
used in commercial transactions. Answer - draft; the drawer; the drawee; the
payee
Drafts/Checks Answer - (3 party papers)
Time/Sight Drafts
Trade Acceptances
Checks
Time/Sight Drafts Answer - Time draft is paid at specific time and sight draft
(demand draft) is paid on sight
2025/2026 UPDATE | QUESTIONA AND ANSWERS |
WITH COMPLETE SOLUTION
What does article 2 apply to? Answer - The passing of title for a price of a
tangible movable thing
Negotiable Instrument Requirements (Front Check) (Article 3) Answer -
Written
Signed by Maker/Drawer
Unconditional Promise or Order to Pay
Fixed Amount of Money
Payable on Demand or at Definite Time
Payable to Order or to Bearer
Written Answer - Must be on permanent and portable material
Signed by Maker/Drawer Answer - Where they sign does not matter, just as
long as the signature is there.
Unconditional Promise or Order to Pay Answer - Looking for buzz words like
"subject to" or "pay to the order of"
If there are two names and it doesn't say "and" then its "or"
,Fixed Amount of Money Answer - Interest payments do not matter
Must involve actual money; gold does not count
Payable on Demand or at a Definite Time Answer - If it does not have a date
then it is payable on demand (checks are always considered payable on
demand)
Demand - Demand instrument, checks
Definite Time - On Nov. 5th 2017, on or before Nov. 5th 2017, on or before the
starting date of the Olympics
Acceleration Clauses - can request entire amount owed b/c of an event like
missed payments
Extension Clauses - when given the right to postpone payment
Payable to Order or to Bearer Answer - Dependent on whether or not a name
is given
If there is a named payee then you must see the words "order" or "bearer"
Order Instruments Answer - Must be payable to the named payee who is real.
Must have "pay to order" or "subject to"
Bearer Instruments Answer - When it states pay cash or pay to the order of
cash
When no REAL name is given; Pay to Mickey Mouse, pay to a stupid idiot, etc.
- Payable to fake person? Bearer Instrument
, - Payable to fake entity? Neither bearer or order instrument; not a negotiable
instrument at all
Holder Answer - Any person in the possession of an instrument drawn, issued,
or indorsed to him or her, to his or her order, to bearer, or in blank.
Types of Negotiable Instruments Answer - Orders to Pay
- Drafts
- Checks
Promises to Pay
-Notes
-Certificates of Deposits (CDs)
A ___________ is an unconditional written order that involves three parties.
The party creating the draft (_____________) orders another party
(_______________) to pay money, usually to a third party (_______________).
The most common type of draft is a check, but drafts other than checks may be
used in commercial transactions. Answer - draft; the drawer; the drawee; the
payee
Drafts/Checks Answer - (3 party papers)
Time/Sight Drafts
Trade Acceptances
Checks
Time/Sight Drafts Answer - Time draft is paid at specific time and sight draft
(demand draft) is paid on sight
