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Test Number Three

 
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PostPosted: Thu May 18, 2017 10:36 pm    Post subject: Test Number Three Reply with quote

To: Law 2 Students Spring 2017 From: S.Waterstone Re: Test Number Three

Procedures to follow for turning in your answers.

1. Next Thursday, 5/25/17 is the absolute deadline for turning in your answers. You may use one of two methods to do so:

a. You may e-mail me your answer sheet using this, and only this e-mail address:

s.waterstone@yahoo.com

If you use this method you must provide me your e-mail by Wednesday, 5/24/17, by 9:00 A.M. There is a 5 point bonus for this early submission.

If you e-mail me you will receive an acknowledgement that I received your completed exam. If you don’t receive this you must assume that I DID NOT receive it.

b. You may print up an answer sheet and turn it in next class session.

GOOD LUCK!!!!!!

The Test Itself:

Every T/F question is worth one point. Each Multiple choice question is worth two points. Each fill in is worth three points.

There are TWO bonus essay questions following the objective portion of the test.

KEY: NI= NEGOTIABLE INSTRUMENT(S)
HDC= HOLDER(S) IN DUE COURSE

GOOD LUCK!!!!!!!

T/F: CIRCLE THE T or F Multiple Choice: CIRCLE the letter of your answer

1. T. F. When considering security regulations, basically any attempt to cheat is unlawful.

2. The conduct that gives rise to a RULE lOb-5 violation requires the actions involve interstate commerce. This requirement is met by use of a. telephone b. mail c. smoke signals c. (a and b) d. all of the above e. none of the above.

5. T. F. In its broadest sense NI’a can be defined as documents created to facili¬tate the transfer of money or credit

8. T. F. The ordinary check is one of the most common form of commercial paper used in the U.S.A.

10. T. F. The requirements to satisfy Article 3 of the U.C.C. regarding NI’a are strictly construed with ambiguities resolved in favor of non-negotiability.

11. T. F. One requirement for commercial paper to be negotiable is that it must be unconditional.

12. T. F. The amount of money "named" on a NI does NOT have to be for a fixed amount.

13. T. F. Because Alvin is certain to die, a NI payable upon the death of Alvin, is negotiable.

15. T. F. Fraud in the inducement, fraud in the factum and fraud in the inception are all terms for the same exact legal principle.

18. T. F. There is absolutely no real difference between being a holder and being a HDC.

20. T. F. A real defense is a good defense against a HDC.

21. T. F. A personal defense is a good defense against a HDC.

23. T. F. A purchaser of goods that prove to be defective cannot use any federal laws to protect them from the HDC concept, if they purchased on credit.

24. T. F. Gifts can be considered "for value" under the definition of a HDC.

25. T. F. Inheritances can be considered "for value" under the definition of a HDC.

26. T. F. When discussing the due date for a NI the term "overdue" means that some or all of the amount of the instrument remains unpaid after its due date.

29. T. F. A party's own negligence in the handling of a NI will not put them at risk of having the instrument paid to their detriment.

31. T. F. A guarantor of a NI can, under certain circumstances, be liable for payment on the instrument.

32. T. F. Overdraft protection means that the bank will put money into your account to make sure that you always have five hundred dollars in your account.

33. T. F. A stop payment order is when a depositor directs his bank to stop only the first three checks that it receives from being paid.

35. T. F. In a general checking account the account-holder is the bank's creditor.

37. T. F. A customer's account at a bank is safe from garnish¬ment by the customer's creditors.

39. T. F. Upon the death of a depositor, the bank must immediately dishonor any checks presented on that customer's account.

41. T. F. Guarantee of payment and guarantee of collection are legal terms that are used interchangeably.

42. The following are deemed to be insiders under Rule lOb-5: a. directors b. officers c. controlling shareholders d. employees of the issuer e. all of the above f. none of the above.

45. The reason(s) for the development of commercial paper was that: a. money fluctuates in value too rapidly b. it became impracticable to always pay for items in cash or commodities c. commercial paper entails much less risk of loss or theft d. (a and b) e. (b and c) f. (a,b, and c) g. none of the above

46. The signature of the maker/drawer of any negotiable instrument must be: a. in black ink b. their full name c. on the back of the instrument d. all of the above e. none of the above.

47. The term "money" in a negotiable instrument can mean: a. U.S. Dollars b. Foreign exchange money (e.g. Euro Dollar) c. stocks d. (a & b) e. (a and c) f. all of the above.

49. A NI may be indorsed on the a. front right corner b. back c. on an allonge d. (b and c) e. all of the above f. none of the above g (a and c).

51. A check becomes stale after a. nine months b. twelve months c. two years
d. three months e. none of the above

52. An oral stop payment order will last for a. six months b. fourteen days c. twenty-one days d. two months d. each of the above f. none of the above.

53. A written stop payment order will initially last for a. six months b. fourteen days c. two months d. each of the above e. none of the above.

54. John receives his bank statement. He neglects to balance his account. Fourteen months later he discovers an invalid charge. He will be: a. able to have the bank re-credit his account b. able to report the problem and will receive a credit for one-half the amount of the charged item c. required to wait another six months and then have the amount credited to his account d. all of the above. e. none of the above.

Fill-In questions: Put your answer in the blanks provided.

55. Under Section 16(b) of the securities exchange act of 1934 any profit realized

by any director, officer, or shareholder owning more than ______________of
outstanding shares of corporation from any purchase and sale, or sale and purchase, of any equity security of his corporation w/in a period of less than six months must be returned to the corporation.

57. Give one example of commercial paper that is classified as a promise to pay money


58. Give one example of commercial paper that is classified as an order to pay money


59. How many parties are typically involved in a note?

60. How many parties are typically involved in a draft?

61. Describe the meaning of the term "allonge."


62. Bill indorses a negotiable instrument in blank, this means

64. As an indorser, you want to make sure that you are NOT LIABLE to other indorsers for payment on the NI you should use these words

65. To qualify as a HDC you need to take the NI for ____________, in _________________(2

words) and without ____________________ that it is overdue, has been dishonored, or has certain defenses/claims against it. (6 points total)

66. Someone who dishonors a negotiable instrument has


67. Jill pays $400.00 cash for a negotiable instrument that is written for $500.00. Jill has paid how much value for this instrument:

68. Gus transfers a NI to Beatrice. Gus qualifies as a HDC. Beatrice cannot in her own right be a HDC. Yet legally Beatrice becomes a HDC. What legal principle allows Beatrice’s standing as a HDC?


69. What is the difference between guaranteeing payment and guaranteeing collection of a NI?


70. A bank has duties to its checking account customers. What are two of these duties?


71. A customer has duties to the bank regarding its checking account. What are two of these duties?


72. A bank Certifies a check. What does that tell you about the check?


73. Jill wrote a check on January 1, 2010. When will this check become stale?


74. At what point in time will a bank no longer be responsible for any negligence that they have shown toward their customers (when the statute of limitations runs)?


75. How long do you have before you need to check your bank statements for errors?


BONUS X-TRA CREDIT.

A complete answer to this hypothetical will earn you a 20 point bonus to your test score. If you choose to just give your conclusions without any legal reasoning you will not earn any points. I'm looking for you to convince me that you understand the applicable law and principles in your analysis and response. For full credit you need to identify all the legal issues and then combine the law with the facts in your answer.

1. Algonquin J. Ragusatonin has just emigrated from his country of Lower Slabovia to Canoga Park, Ca. He only speaks and reads Russian. He has no knowledge of American Customs. He enrolls in an English for Foreign speakers School. The School is recommended by the Emigration Officer, John Nogood, of the Lower Slabovian Embassy. Unbeknown to Algonquin the Officer and the owner of the School, Sneaky Snake, Esq. are scam artists. They have a plan to cheat foreign speakers out of their money. (Algonquin has $100K in American assets.) Algonquin is given an incoming “application” totally in the English language. The “application” is really a promissory note for $75K. Algonquin signs the note. The next day Snake and Nogood find a buyer for the note, one Johnny Appleseed. Appleseed qualifies as a HDC. Appleseed eventually tries to enforce the note against Algonquin. What results? And much more importantly why do you choose this result?

A complete answer to this hypothetical will earn you a 20 point bonus to your test score. If you choose to just give your conclusions without any legal reasoning you will not earn any points. I'm looking for you to convince me that you understand the applicable law and principles in your analysis and response. For full credit you need to identify all the legal issues and then combine the law with the facts in your answer.


2. Jesse James was tried and acquitted of a bank robbery. Shortly thereafter he deposited fifteen million dollars in the Lower Bank of Tijuana located in San Diego, California. Jones writes a check to purchase a home in San Diego. The check is for six million dollars. Bank dishonors the check, because the very conservative manager of Bank feels that James really committed the bank robbery, despite the fact that the jury found him not guilty. Jones had sufficient funds in his account at the bank. 1. Jones sues Bank for wrongfully dishonoring his check. 2. He further claims that he lost the benefit of his bargain, as the price of the house is now up to seven million dollars. 3. He also claims damages, as his reputation has been damaged in that it is now spread about town that he writes bad checks. 4. Lastly he claims he wants punitive damages awarded. What is the result of EACH of the four claims of Jones in his lawsuit?
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