Exam 3

Question 1

A check that a bank draws on its own funds and is signed by a responsible bank official is called

Answer 1

cashier’s check

Question 2

The bank or other financial institution in which a depositor has money on account and which is ordered to comply with the depositor’s order to pay is called the ______; the depositor who has signed the order to pay is called the _____; and the party who is instructed to receive payment on the order to pay is called the _______.

Answer 2

drawee, drawer, payee

Question 3

Notes, checks, and other commercial paper which may be transferred to another party through the act of endorsement are called

Answer 3

negotiable

Question 4

Writing “John Doe” on the back of a check is an example of a _______; and writing “For Deposit Only, John Doe” is an example of______.

Answer 4

blank endorsement, restrictive endorsement

Question 5

Which of the following is not a type of endorsement?

• blank endorsement
• warrantied endorsement
• qualified endorsement
• special endorsement

Answer 5

warrantied endorsement

Question 6

The bank or other financial institution in which a depositor has money and which is ordered to make payment from the depositor’s account to a named party is called the____

Answer 6

drawee

Question 7

The party who is directed to receive payment on a promissory note is called the

Answer 7

payee

Question 8

The party who signs a check or bank draft ordering payment to be made from funds which she/he has on deposit at a financial institution is called the

Answer 8

drawer

Question 9

The party who executes the promissory note and who promises to pay the borrowed money is referred to as the

Answer 9

maker

Question 10

The party who, as holder, payee, or bearer, signs ones name on the back of a negotiable instrument is called a/an

Answer 10

endorser

Question 11

A draft drawn on a bank and payable on demand

Answer 11

check

Question 12

The signature of the payee or other holder on the back of a check is called a/an

Answer 12

endorsement

Question 13

Notes, checks, and other commercial paper which may be transferred to another party through endorsement are called

Answer 13

negotiable

Question 14

The most important statute in the area of business law is the

Answer 14

Uniform Commercial Code

Question 15

A person in possession of commercial paper who is also known as an “innocent purchaser” is called a/an

Answer 15

holder in due course

Question 16

A contract which is formed between consignor and a carrier is called

Answer 16

bill of lading

Question 17

An endorsement that said “For Deposit Only” would be an example of a/an ________ endorsement.

Answer 17

restrictive

Question 18

A written order where one party instructs another party to pay a third party a certain sum in money from the account of the first party upon demand or at a definite time is called a

Answer 18

draft

Question 19

A written promise made by a person or business to pay a certain sum in money to another party at a specified or determinable period of time is called a

Answer 19

promissory note

Question 20

Which of the following is not considered a draft?

• traveler’s check
• certified check
• certificate of deposit
• voucher check

Answer 20

certificate of deposit

Question 21

An unconditional written order or promise to pay money is one classification of

Answer 21

commercial paper

Question 22

A bailment which benefits only one of the parties is called

Answer 22

sole benefit bailment

Question 23

In a bailment relationship, the party who has title to the goods, but not possession, is called the

Answer 23

bailor

Question 24

A bailment relationship which benefits both parties involved is called a/an

Answer 24

mutual bailment

Question 25

The transfer of possession, but not title, of personal property from one party to another on the condition that the identical property will be returned is called a/an

Answer 25

bailment

Question 26

In a bailment, the party who has possession but not title is called

Answer 26

bailee

Question 27

Which of the following is NOT TRUE of bailed goods?

• bailee can sell the goods
• bailee must take reasonable care of the goods
• bailee must return the goods to bailor
• bailor retains title to the goods

Answer 27

bailee can sell the goods

Question 28

A contract which is formed between a consignor and a shipper is called a/an

Answer 28

bill of lading

Question 29

The funeral director who receives photographs from a family is the

Answer 29

bailee

Question 30

A person who transports goods or persons for a fee, and can be selective as to their customer is what kind of carrier?

Answer 30

private

Question 31

A carrier that transports goods or persons for a fee for all who apply for the services, and without discrimination, is what type of carrier?

Answer 31

common

Question 32

A person who transports goods or persons for a fee only under special instances and arrangements is called a _______ carrier.

Answer 32

private

Question 33

A funeral home is best categorized as being what type of carrier?

Answer 33

private carrier

Question 34

When a bailment relationship benefits only the person who has title but NOT physical possession of the property involved, this is a bailment for the sole benefit of the

Answer 34

bailor

Question 35

A bailment relationship which benefits both parties involved is called a/an

Answer 35

mutual bailment

Question 36

The generic term for one who is engaged in the business of transporting goods, persons, or both, for a fee, is the definition of

Answer 36

carrier

Question 37

In a bailment relationship, the party who has title to the goods, but NOT possession, is called the

Answer 37

bailor

Question 38

You have just finalized arrangements for the funeral of Mr. Smith. Mrs. Smith is going to pay for a portion of the funeral by signing over the proceeds of a life insurance policy to the funeral home. For the balance not covered by the insurance funds she is going to write a check from her bank account payable to the funeral home.
In relation to the check Mrs. Smith is the:

Answer 38

drawer

Question 39

In relation to the check the funeral home would be the

Answer 39

payee

Question 40

In relation to the check the bank is the

Answer 40

drawee