Multiply Choice
1. Which of the following statements are true?
(a) A draft is always a check.
(b) A check is always a draft.
(c) A note must involve at least three people.
(d) All of the above.

2. Which of the following standards are required for negotiability?
(a) The instrument must be signed by the payee.
(b) The instrument must be payable on demand.
(c) The instrument must be payable to order.
(d) None of the above.

3. Marla is not a holder in due course if she takes an instrument
(a) Believing that the underlying contract was honest, although it turned out to be dishonest.
(b) That is a consumer credit contract
(c) That appeared commercially reasonable when made but turned out to be dishonest.
(d) All of the above.

4. In order to negotiate bearer paper, one must:
(a) Indorse the paper.
(b) Indorse and deliver the paper with consideration.
(c) Deliver the paper.
(d) Deliver and indorse the paper.

5. Bond fraudulently induced Teal to make a note payable to Wilk, to whom Bond was indebted. Bond delivered the note to Wilk. Wilk negotiated the instrument to Monk, who purchased it with knowledge of the fraud and after it was overdue. If Wilk qualifies as a holder in due course, which of the following statements is correct?
(a) Monk has the standing of a holder in due course through Wilk.
(b) Teal can successfully assert the defense of fraud in the inducement against Monk.
(c) Monk personally qualifies as a holder in due course.
(d) Teal can successfully assert the defense of fraud in the inducement against Wilk.