Conversion of an Instrument

question 32

Multiple Choice

Conversion of an instrument:

• A) is an authorized assumption and exercise of ownership over it.
• B) may occur if a person pays an instrument on a forged indorsement.
• C) differs from conversion of personal property with respect to the applicable laws.
• D) occurs if it does not lack indorsement necessary for negotiation.

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Definitions:

Finance Company

A type of financial institution that provides loans to consumers and businesses, often for specific purchases such as vehicles, equipment, or home improvements.

Holds a Lien

Refers to the legal right or interest that a lender has on a property, until a debt owed by the property owner is paid off.

Implied Warranties

Legally inferred guarantees that ensure products meet minimum quality standards, providing protection beyond explicit statements.

Reasonably Fit

A measure of whether a product meets the ordinary purposes it is intended for, based on what a reasonable person would expect.