Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
True/False Questions
1) A document may be a negotiable instrument even if it does not satisfy the requirements
of the Bills of Exchange Act.
a. True
b. False
2) Stefan gave a cheque for $500 to his daughter, Monique, as a birthday present. Because
Monique did not give any consideration in exchange for her birthday present, Stefan's bank
will not honour the cheque.
a. True
b. False
3) Grant wanted to sue a car dealership for breach of contract. Carolyn agreed to work as
his lawyer. To ensure that he eventually paid his bill, Carolyn required grant to sign a
document in which he promised to pay her "$10 000 on December 31 if the court holds the
car dealership liable for damages." That document is a promissory note that is governed by
the Bills of Exchange Act.
a. True
b. False
4) Alexandra bought a snow blower from Rajeev. The price was $5000. As payment, she
gave him a document entitled "Promissory Note" that contained her unconditional promise
to pay $5000 to him "when the snow next falls." Even though that document does not
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
satisfy the requirements of the Bills of Exchange Act, Rajeev is still entitled to receive
$5000 from Alexandra if the condition is met.
a. True
b. False
5) A share certificate may be a type of negotiable instrument.
a. True
b. False
6) Miguel opened a chequing account at the Bank of Guelph. As part of that transaction,
Miguel authorized the bank to credit his account every time that he wrote a cheque on it.
a. True
b. False
7) Beryl opened a chequing account at the Bank of Banff. As part of that transaction, she
deposited ten $100 bills into her new chequing account. Technically speaking, she
continues to own those bills until she writes a cheque on her account.
a. True
b. False
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
8) Kelly drew a cheque for $10 000 on her account at the Bank of Sudbury. She used that
cheque to buy a widget from Joe. Joe presented the cheque to the Bank of Sudbury and
received $10 000 in cash. The bank now realizes that it made a mistake because the balance
in Kelly's account was never more than $2000. The bank therefore is entitled to recover
from Joe the money that it paid to him by mistake.
a. True
b. False
9) Elliot bought a widget from Margaret. He paid the purchase price of $5000 by giving her
a cheque that he had drawn on his account at the Bank of Yorkton. Before Margaret had an
opportunity to present the cheque for payment, Elliot died. The cheque therefore is
automatically considered to be certified.
a. True
b. False
10) Karinda sold a widget to Konrad. He paid the $150 000 purchase price by giving her a
bill of exchange drawn on the Klondike Trust Co. Karinda is entitled to sue the drawee if
the bill is not accepted.
a. True
b. False
11) A sight draft allows the payee of a bill of exchange to receive payment immediately,
whereas a demand draft only allows the payee to require the drawee to make payment
within three days of presentation.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
a. True
b. False
12) Analee bought a widget from Nathan. On March 1, she paid the purchase price by
giving him a promissory note for $100 000. The entire payment is due on June 1. The note
contains an acceleration clause. Consequently, Nathan has the absolute right to receive
payment before June 1 if he wants.
a. True
b. False
13) Bronwyn Hogg received a cheque. She endorsed in blank. At the same time, her sister,
Gwyneth, wrote her own signature and the following words on the back of the cheque:
"Guarantor for B Hogg." The cheque now contains both a general endorsement and an
accommodation endorsement.
a. True
b. False
14) A person can be considered to be a holder in due course even though they did not give
consideration for the instrument.
a. True
b. False
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
15) The provisions in the Bills of Exchange Act dealing with consumer notes and bills can
apply to a promissory note or to a bill of exchange, but not to a cheque because a cheque is
never used for credit purposes.
a. True
b. False
Multiple Choice Questions
1) You and I have entered into a contract for the sale of a boat. We have agreed that I will
deliver possession of the vessel to you at the same time that you pay the purchase price of
$10 000. You have the option of paying with either cash or a certified cheque. Which of the
following statements is TRUE?
a. You would prefer to pay with a cheque because $10 000 in cash does not easily fit into
your pocket.
b. You would prefer to pay with cash because cash is less risky than a cheque if a theft
occurs.
c. I would prefer to receive a cheque because it is more difficult for me to transfer cash to a
stranger.
d. I would prefer to receive cash because a certified cheque would not give me any rights
against the drawee bank.
e. Certification of a cheque would be relevant only if I intended to negotiate the cheque to
someone other than a bank.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
2) A negotiable instrument is a special type of contract. It differs from a regular contract
because a negotiable instrument is enforceable
a. without consideration.
b. even if the only consideration that supports it is a promise to perform a pre-existing
obligation to the same party.
c. even if the only consideration that supports it is love and affection.
d. even though the only consideration that supports it is always a pre-existing public duty.
e. only if it is placed under a seal.
3) Martina bought a necklace from Roland. The price of the necklace was $10 000. Martina
promised Roland that she would pay that amount to him. As part of the same transaction,
she also gave him a cheque for that amount. Roland later bought a painting from Astral
Gallery Inc. The price of the painting was $10 000. Which of the following statements is
TRUE?
a. Roland can pay for the painting by negotiating the cheque to Astral Gallery only if Astral
Gallery and Martina have accounts with the same bank.
b. Roland could pay for the painting by negotiating the cheque to Astral Gallery, but he
could not pay by assigning to Astral Gallery the rights that he has against Martina under the
earlier sales contract.
c. Roland could pay for the painting by cashing the cheque and delivering the money to
Astral Gallery, but he could not simply negotiate to Astral Gallery the cheque that he had
received from Martina.
d. If given a choice, Astral Gallery would probably prefer to receive an assignment of the
rights that Roland has against Martina under the earlier sales contract, rather than
negotiation of Martina's cheque.
e. Roland is entitled to recover $10 000 from Martina under their sales contract or $10 000
from her on the basis of her cheque, but not both.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
4) Which of the following statements is TRUE with respect to negotiable instruments?
a. Technically speaking, there are only three types of negotiable instruments: cheques, bills
of exchange, and promissory notes.
b. The Bills of Exchange Act applies to every type of negotiable instrument.
c. Unlike most contracts, a negotiable instrument is effective only if it is written and signed.
d. A negotiable instrument is valid as long as it provides a mechanism that the drawer can
use to determine how much the payee is entitled to receive.
e. A negotiable instrument is effective only if it contains a conditional obligation to pay
money.
5) Ferdinand bought a boat from Isabelle. The price was $100 000. She required payment to
be made by way of a cheque. Which of the following statements is TRUE?
a. Ferdinand can create a cheque by ordering his sister, Esmeralda, to pay $100 000 to
Isabelle.
b. As soon as Ferdinand creates a valid cheque, Isabelle will acquire rights against the
drawee.
c. By writing a cheque, Ferdinand will create an order that requires the drawee to credit his
bank account.
d. Isabelle will not be able to cash Ferdinand's cheque unless she has a bank account.
e. If Ferdinand creates a valid cheque, his bank owes him an obligation to honour that
negotiable instrument.
6) Claire gave a cheque for $5000 to Antonio. Which of the following statements is TRUE?
a. Claire has created a special type of promissory note that is drawn upon a bank.
b. Claire has created a special type of bill of exchange that is drawn upon a bank.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
c. Antonio is entitled to receive $5000 from Claire even if he did not provide any
consideration in exchange for her cheque.
d. Antonio will acquire rights against Claire only if her cheque is accepted by the drawee.
e. Antonio has acquired rights that can be enforced directly against the drawee.
7) On February 1, Patricia bought a guitar from Metheny's Music Shop. The price was
$2500. She gave the store a cheque for that amount that was dated June 1. Which of the
following statements is TRUE?
a. The cheque is invalid because it is postdated.
b. If the store presents the cheque for payment on October 1, the drawee will probably
refuse to honour the instrument on the ground that it is staledated.
c. Metheny's Music Shop must present the cheque to the drawee for payment on or before
June 1.
d. Because the cheque is dated five months after it was created, it is considered overdrawn.
e. Patricia has created a postdated cheque that cannot be honoured before June 1.
8) Raj owed $5000 to Monica. In payment of that debt, he gave her a cheque for that
amount that was drawn on his account at the Bank of Regina. In fact, his account only held
$3000 worth of credits. Which of the following statements is TRUE?
a. Raj's cheque is countermanded.
b. Although it is required to pay $5000 to Monica, the Bank of Regina can sue Raj for
breach of contract.
c. The Bank of Regina will probably pay $3000 to Monica.
d. Raj has effectively asked the Bank for a loan which may or may not be granted.
e. Raj will be entitled to sue the Bank of Regina if it pays any money to Monica.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
9) Wallace bought a widget from Sabrina. The price was $7500. When he collected the
widget from her warehouse, he gave her a cheque that was drawn on his account at the
Bank of Windsor. When he got the widget home, however, he discovered that it was
defective. He therefore went to his bank and placed a stop payment order on the cheque.
Which of the following statements is TRUE?
a. Wallace's cheque is overdrawn.
b. When Sabrina presents the cheque for payment, the Bank of Windsor has a complete
discretion to choose between honouring it and dishonouring it.
c. Although he authorized the Bank of Windsor to debit his account when he wrote the
cheque, Wallace's stop payment order revoked that authority.
d. Sabrina can sue both Wallace and the Bank of Windsor if the bank refuses to honour the
cheque.
e. Sabrina is entitled to receive payment on the cheque if a court decides that Wallace was
not entitled to discharge the sales contract on the basis that the goods were defective.
10) Which of the following statements is TRUE with respect to certification of cheques?
a. A certified cheque is usually certified at the request of either the payee or the drawee.
b. The process of certification is expressly based on a detailed set of provisions in the Bills
of Exchange Act.
c. Certification allows the payee to receive payment even if the relevant account is
overdrawn.
d. After certifying a cheque, a bank normally transfers funds into a countermand account
and then uses those funds to honour the cheque when it is presented for payment.
e. The decision to countermand a cheque must be made by the payee or the drawee, but not
by the drawer.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
11) Scott bought a widget from Gowhara. The price was $10 000. He paid with a cheque
that he had drawn on his account at the Bank of Kamloops. Scott had the cheque certified
before he gave it to Gowhara. In fact, Scott's account balance was only $8000. When he
discovered that fact, he went to the bank and gave instructions to have the cheque
countermanded but the bank refused that request. Which of the following statements is
TRUE?
a. The Bank of Kamloops is required to pay Gowhara $8000.
b. The Bank of Kamloops is required to pay Gowhara $10 000.
c. Scott is entitled to countermand the cheque because it had been certified at his request,
rather than at Gowhara's request.
d. Regardless of certification, it is impossible to countermand a cheque that has been
written on an overdrawn account.
e. Because the bank certified the cheque, it must pay $10 000 to Gowhara even though
Scott ultimately will have to provide only $8000 to the bank.
12) Which of the following statements is TRUE with respect to bills of exchange?
a. A bill of exchange must be drawn upon a bank, a trust account, or some other financial
institution.
b. A bill of exchange is usually used only for relatively small domestic transactions.
c. Once a bill of exchange is accepted, the drawer becomes known as the acceptor.
d. Unlike a promissory note, a bill of exchange cannot be used to create a credit
arrangement between the parties.
e. Whereas a cheque must be drawn on a bank, a bill of exchange may be drawn on a bank
or anyone else.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
13) On June 1, Rituparna bought a widget from Joel. The price was $75 000. On that same
day, she gave him a bill of exchange for that amount that was drawn on the Bank of
Brandon. Which of the following statements is TRUE?
a. Rituparna is the drawee, Joel is the payee, and the Bank of Brandon is the acceptor.
b. A bill of exchange must be payable on demand.
c. The Bank of Brandon owes Rituparna a legal duty to accept the bill if Joel's account
balance is at least $75 000.
d. Unlike a cheque, a bill of exchange is automatically considered to be certified unless the
relevant account is overdrawn.
e. June 1 is not necessarily the due date.
14) On May 1, Emile bought a widget from Megan. The price was $15 000. On June 1,
Emile paid that price by giving Megan a bill of exchange that was drawn on the Bank of
Swift Current. The bill was stated to be payable "on demand." Which of the following
statements is TRUE?
a. Because the bill is payable on sight, Megan cannot present it to the Bank of Swift
Current for acceptance
b. If Megan presents the bill to the Bank of Swift Current on July 1, she is entitled to
receive $15 000 immediately.
c. The bill is invalid because while a promissory note can be payable on sight, a bill cannot.
d. Unlike certification of a cheque, acceptance of a bill would not create rights that Megan
could use against the Bank of Swift Current.
e. The reason that the bill is considered to be payable "on sight" is that it was created some
time after Emile and Megan created their sales contract.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
15) Which of the following statements is TRUE with respect to promissory notes?
a. A promissory note always involves three different parties, called the maker, the payee,
and the payer.
b. Unlike a cheque or a bill of exchange, a promissory note is effective even without
consideration because it consists of a promise to pay money.
c. The subject matter of a promissory note can be either the payment of money or the
performance of services.
d. A promissory note must be payable in instalments.
e. A promissory note usually requires the payment of interest, but it need not do so.
16) On January 1, Jasmine bought a speedboat from Malcolm. The purchase price was $100
000. Jasmine gave Malcolm a promissory note for $100 000. The note was payable in five
monthly instalments beginning on March 1. Which of the following statements is TRUE?
a. Because a promissory note must be for a "sum certain," the note that Jasmine created
could not require her to pay interest on the purchase price of $100 000.
b. If Malcolm is unable to recover any money under the promissory note, he must sue
Jasmine on the basis of their sales contract, rather than on the basis of the promissory note
itself.
c. Jasmine's promissory note cannot contain an acceleration clause because it is payable in
instalments.
d. A promissory note, like a bill of exchange, must have a drawee.
e. After each installment payment, Jasmine should make sure that Malcolm writes a receipt
onto the promissory note itself.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
17) Natalia has a chequing account at the Bank of Victoria. It contains a balance of $3000.
Natalia bought a scooter from Edgar for $1000. He wants to have a cheque in bearer form.
That desire can be achieved if
a. Natalia persuades a friend to add an accommodation endorsement.
b. the cheque contains a special endorsement.
c. Natalia creates a cheque and leaves the amount blank.
d. Edgar persuades a banker to add a qualified endorsement.
e. Natalia makes a cheque payable to Edgar and he then puts a blank endorsement on the
back of it.
18) Patrick bought a widget from Ishani. The purchase price was $25 000. He paid by
giving her a cheque for that amount that was drawn on his account at the Bank of Fundy.
The cheque was made payable to Ishani. By coincidence, Ishani owes $25 000 to XYZ Inc.
Which of the following statements is TRUE?
a. If Ishani negotiated the cheque to XYZ Inc, that company would be entitled to turn the
cheque into a bearer instrument.
b. If Ishani negotiated the cheque to XYZ Inc, that company could not ask the Bank of
Fundy to certify the cheque.
c. If Ishani wanted to negotiate the cheque to XYZ Inc, she would have to first have the
cheque certified by the Bank of Fundy.
d. If Ishani negotiated the cheque to XYZ Inc, that company could receive payment from
the Bank of Fundy only if it first provided consideration to Patrick.
e. Ishani can discharge her debt to XYZ Inc by simply delivering the cheque to the
company.
19) Alice bought a boat from Brian. The purchase price was $250 000. On February 1, she
paid that price by giving him a bill of exchange drawn on her account at the Bank of
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
Kenora. The bill was due on December 31 and it was payable to Brian. On March 1, Brian
negotiated the bill to Carla. On April 1, the Bank of Kenora accepted the bill at Carla's
request. On May 1, Carla placed a blank endorsement on the bill and negotiated it to Dave.
On June 1, Dave negotiated the bill to Edna. Every attempt at negotiation was successful.
Which of the following statements is TRUE?
a. Brian could not have endorsed the bill.
b. The Bank of Kenora has the secondary liability to pay Edna.
c. Although she is not entitled to receive more than $250 000 in total, Edna has acquired
rights against Alice, Brian, and Carla, but not the Bank of Kenora.
d. Dave must have added an accommodation endorsement.
e. A situation may arise in which Carla is entitled to recover $250 000 from Brian.
20) Jacob bought a widget from Erin for $15 000. In payment, he gave her a cheque that
was payable to her. The cheque was drawn on his account at the Bank of Kitchener. Erin
signed her name on the back of the cheque and delivered it to Arthur in order to discharge a
debt that she owed to him. Arthur presented the instrument to the Bank of Kitchener for
payment, but was refused payment because the balance for Jacob's account was only $8000.
Which of the following statements is TRUE?
a. Arthur should provide notice of dishonour to the bank's manager as soon as possible.
b. Arthur has a right to collect $8000 from the bank.
c. If the widget that Jacob bought from Erin is defective, Arthur cannot acquire any rights
against the drawer of the cheque.
d. Notice of dishonour will be effective only if it is made in writing.
e. Arthur may be able to sue Jacob and Erin.
21) Which of the following statements is TRUE with respect to notice of dishonour?
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
a. Notice of dishonour only needs to be provided against a party that did not endorse an
instrument.
b. In some circumstances, an endorser may be held liable even if it did not actually receive
notice of dishonour following the dishonour of a cheque.
c. Notice of dishonour is significant mainly because it relieves the drawee of a cheque of
liability.
d. Once notice of dishonour is given to one endorser, it is automatically effective against all
prior endorsers.
e. To be effective, notice of dishonour normally can be provided any time within six
months of dishonour.
22) Ismail used a cheque to pay for a widget that he bought from Maria. Maria delivered
the cheque to Geoff Gagne after writing her signature and the following words on the back
of it: "To Geoff Gagne if he builds a gazebo in my backyard." After he acquired the
cheque, Geoff wrote his signature and the following words on the back of it: "For deposit
only." Which of the following statements is TRUE?
a. The cheque contains a qualified endorsement and a restrictive endorsement.
b. The cheque contains a qualified endorsement and a special endorsement.
c. Geoff can negotiate the cheque to Fawn by simply delivering it to her.
d. Geoff can require Ismail to add an accommodation endorsement to the cheque.
e. The cheque contains a conditional endorsement and a restrictive endorsement.
23) Which of the following types of endorsements can you place upon a negotiable
instrument without creating any risk of liability for yourself?
a. identifying endorsement and qualified endorsement
b. identifying endorsement
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
c. accommodation endorsement and identifying endorsement
d. accommodation endorsement and restrictive endorsement
e. a restrictive endorsement but not a special endorsement
24) Fenna created a promissory note for $10 000 that was payable to the order of Mark. She
delivered that instrument to him. Mark is indebted to Muriel for $10 000. He wants to
discharge that debt by allowing Muriel to receive payment under the note that Fenna
created. Muriel is unsure whether Fenna or Mark would be capable of actually paying $10
000 if asked to do so. However, Muriel is confident that Mark's brother, Cameron, is
capable of paying $10 000. Which of the following statements is TRUE?
a. Mark is not entitled to negotiate Fenna's note to Muriel if that note is payable on demand.
b. Muriel's wishes can be satisfied by the creation of a special endorsement by Mark and an
accommodation endorsement by Cameron.
c. Muriel's wishes can be satisfied by the creation of a special endorsement by Mark and an
identifying endorsement by Cameron.
d. Muriel's wishes can be satisfied by the creation of a special endorsement by Mark and an
accommodation endorsement by Fenna.
e. Cameron cannot be held liable unless he becomes the holder of the note at some point.
25) Ranjit currently has possession of a cheque that was created by Maura. Although Maura
created that cheque on January 1, the instrument is dated June 1. The cheque originally was
payable to Nora. The cheque now bears endorsements by Nora and Shelley. Maura, Nora,
Shelley, and Ranjit are the only parties that have dealt with the cheque. Which of the
following statements is TRUE?
a. Ranjit may be a holder in due course even if he did not personally provide consideration
to anyone.
b. Ranjit cannot be a holder in due course if today's date is July 1.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
c. Ranjit cannot be a holder in due course unless Shelley was a holder in due course.
d. Ranjit cannot be a holder in due course if he received the cheque when it was in bearer
form.
e. Maura may be the drawee of the cheque.
26) Which of the following defences may be either defect in title defences or real defences,
depending upon the circumstances?
a. minority
b. material alteration
c. personal defences
d. contributory negligence
e. absence of delivery
27) Shoshanna drafted a complete cheque and made it payable to bearer. She placed it in
her desk drawer. She intended to give it as a prize to whichever student achieved the
highest grade in her business law class. The cheque was stolen. After passing through
several hands, it came into Ethan's possession. Which of the following statements is
TRUE?
a. Ethan can enforce the cheque against Shoshanna if he is a holder.
b. Ethan can enforce the cheque against Shoshanna if he is a holder in due course and there
is no real defense.
c. Shoshanna merely has a personal defence as a result of the theft.
d. Shoshanna has a real defence as a result of the theft.
e. Ethan can enforce the cheque against Shoshanna because he has possession of the cheque
and therefore is considered an immediate party.
McInnes/Kerr/VanDuzer: Managing the Law: The Legal Aspects of Doing Business, Fourth Edition
Chapter 14: Special Contracts: Negotiable Instruments
28) Tara created a cheque for $5000 that was payable to bearer. She delivered it to Simon.
Simon negotiated it to Melanie, who then negotiated it to Oscar, who then negotiated it to
Mike. While Melanie had possession of the cheque, she altered it so that it now appears to
be a cheque for $25 000. Which of the following statements is TRUE?
a. Mike is entitled to receive $50 000 from Tara as long as Melanie acted in good faith.
b. If the alteration is apparent to the naked eye, the drawee bank would be entitled to debit
$25 000 from Tara if she carelessly facilitated the alteration when she drafted the cheque.
c. If the alteration is not apparent to the naked eye, Mike is entitled to receive $50 000 from
Oscar.
d. If the alteration is apparent to the naked eye, Mike is entitled to receive payment from
Tara.
e. If the alteration is not apparent to the naked eye, Mike is entitled to receive $5000 from
Tara if she did not carelessly facilitate the alteration when she drafted the cheque.
29) Wendell bought a widget from Sharon and used a cheque to pay the purchase price of
$10 000. Wendell made the cheque payable to Sharon personally. That cheque was drawn
on Wendell's account at the Bank of Gander. A thief stole the cheque from Sharon, forged
her general endorsement, and sold the cheque to Oren. Oren then endorsed the cheque and
negotiated it to Abby. Which of the following statements is TRUE?
a. Abby is entitled to sue Wendell because the forgery does not affect the fact that he
promised to pay $10 000.
b. Wendell owes a debt to Oren.
c. Because forgery is a real defence, Abby cannot sue anyone except the person who
committed the forgery.
d. If the Bank of Gander paid $10 000 to Abby and debited Wendell's account, Wendell can
force the bank to repay $10 000 into his account if he acts promptly.
