Which of the Following Is True Under the UCC Regarding

question 54

Multiple Choice

Which of the following is true under the UCC regarding liability of a principal if the agent enters into a contract that is a negotiable instrument?

• A) The principal is liable to the same extent as if no negotiable instrument were involved because the negotiable instrument has no effect on the principal's liability.
• B) The principal cannot be held liable unless the principal's name is on the instrument.
• C) The principal cannot be held liable unless the agent's signature indicates that it was made in a representative capacity.
• D) The principal cannot be held liable unless the principal's name is on the instrument or the agent's signature indicates that it was made in a representative capacity.
• E) The principal cannot be held liable unless the principal's name is on the instrument or the agent's signature indicates that it was made in a representative capacity, or the agent has been ruled insolvent.

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Definitions:

Avoidance Powers

Legal powers granted to bankruptcy trustees or debtors in possession to invalidate certain pre-bankruptcy transactions made by the debtor, to protect the bankruptcy estate.

Bankruptcy Trustee

An individual appointed by the court to oversee and administer a debtor's estate in a bankruptcy case, ensuring the fair distribution of assets to creditors.

Mutual Mistake

A legal concept where all parties involved in a contract have a shared misunderstanding about a fundamental fact of the contract.

Qualified Pension Plan

A retirement plan that meets requirements set by the IRS, offering tax benefits to the employer and protection for the employees.