Asked by Julia Gonzalez on May 22, 2024
Verified
List the five conditions under which a holder may take an instrument for value.
Instrument For Value
A legal document that represents or embodies a certain value and can be exchanged or used in financial transactions, such as checks, bonds, or certificates of deposit.
Conditions
Stipulations or requirements specified within an agreement or contract that must be met for it to be fully effective.
Holder
An individual or entity that legally possesses a negotiable instrument, like a check or promissory note, and has the right to enforce it.
- Understand the principle of acquiring an instrument "for value" and its application within the Holder in Due Course (HDC) doctrine.
Verified Answer
AB
Alison BaronMay 28, 2024
Final Answer :
A holder may take an instrument for value if the holder: (1) Performs the promise for which the instrument was issued; (2) Acquires a security interest or other lien in the instrument; (3) Takes the instrument for payment of a preceding claim; (4) Exchanges the instrument for another negotiable instrument; or (5) Exchanges the instrument for an irrevocable obligation to a third party.
Learning Objectives
- Understand the principle of acquiring an instrument "for value" and its application within the Holder in Due Course (HDC) doctrine.