Asked by Jimmy Christiansen on May 20, 2024
Verified
A holder in due course must take the negotiable instrument in good faith.
Good Faith
An expectation for parties to act honestly and not mislead or deceive each other in a contract.
Holder in Due Course
A legal term referring to a party who has acquired a negotiable instrument in good faith and without notice of any defects.
- Specify the conditions a party must meet to be designated as a holder in due course.
Verified Answer
KH
Kirti HoodaMay 21, 2024
Final Answer :
True
Explanation :
According to Uniform Commercial Code (UCC)Section 3-302(a)(2)(ii),a holder in due course must take the negotiable instrument in good faith.UCC Section 3-103(a)(4)defines good faith as "honesty in fact and the observance of reasonable commercial standards of fair dealing." Therefore,to act in good faith,a holder must not deviate from the reasonable commercial standards of fair dealing.The UCC drafters were most concerned with the fairness of the dealing.
Learning Objectives
- Specify the conditions a party must meet to be designated as a holder in due course.
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