CHAPTER 23—NEGOTIATION AND DISCHARGE Key
1. A(n) _____ is a signature on the back of an instrument along with any directions or limitations regarding use
of or liability for the instrument.
2. James wants to indorse a check to Janice, but wishes to rid himself from all further liabilities. Which of the
following types of indorsements is James likely to use in this case?
3. Which of the following best describes an allonge?
4. A _____ indorsement designates the particular person to whom payment should be made.
5. Which of the following best describes a restrictive indorsement?
6. Which of the following is true of the obligation of negotiator of bearer paper?
7. _____ is a unilateral act of a holder of an instrument, usually without consideration, whereby the holder gives
up rights on the instrument.
8. Which of the following best describes cancellation?
9. The trailing edge is the right side of a check when looking at it from the front.
10. The Uniform Commercial Code does not require an allonge to be attached to an instrument.
11. Negotiable instruments can be made payable to more than one person.
12. A special endorsement is one having no words other than the name of the indorser.
13. A qualified indorser warrants that the signatures on the instrument are genuine.
14. A depository bank receiving a check with a restrictive indorsement, such as “for deposit ” must always
honor the restriction.
15. The warranty liability of a qualified indorser is never the same as that of an unqualified indorser.
16. A person who negotiates a bearer instrument by delivery alone, is liable to the immediate transferee as a
warrantor of its validity.
17. A cancellation made by mistake is not effective.
18. When a negotiable instrument is lost, this automatically discharges the obligation of the holder.
19. Parties can be discharged from an obligation, if there has been the necessary lapse of time provided by a
statute of limitations.
20. Explain liabilities for payment of instrument.