Question

The purpose of the Shelter Rule is to provide marketability of commercial paper to holders in due course guarantee rights of cloture to holders of commercial paper. protect interests of all transferees of commercial paper. Ruard against the hardships associated with equitable discharge Real defenses include duress making the transaction void. minority. fraud in the execution. all of the above. To qualify as a holder in due course, a transferee must acquire an instrument for no value. hold possession of it for at least ninety days. without notice of certain specified matters. for the purpose of subsequent transfer to an heir. Reasons why a bank would dishonor a check and return the item include the drawer not holding an account at the bank. a forged signature on the item. insufficient funds in the drawer's account. all of the above. Electronic fund transfers are preferred over checks because they eliminate the check drawer's float of funds. reduce the time and expense of processing checks. both A and B. neither A not B. A payor bank is under no obligations to pay an uncertified check that is over six weeks old. six months old. sixty days old. none of the above.

Answer 1

7. C) Protects interest of all transferees of commercial paper : The purpose of the Shelter Rule is to protect the interest of all transferee.

8. D) All of the above : Real defenses includes duress in making the transaction void, minority and fraud in execution.

9. C) Without notice of certain specified matters : To qualify as holder in due course, a transferee must acquire an instrument for without notice that an instrument is overdue, without notice that an instrument has been dishonored, without notice of defense or claim and without notice of unauthorized signatory or Alteration.

10. A) All of the above : A check can be dishonored due to any of the reason mentioned above.

11. C) Both A & B : Electronic Fund Transfer is preferred over checks because they eliminate the float of funds along with reduced time and fees for processing checks.

12. B) Six months old : A bank is not obligated to pay an uncertified check presented more than six months from its date.