Asked by Ericka Harris on May 17, 2024
Verified
What type of notice prevents a holder from being a holder in due course?
A) Notice that the instrument is overdue.
B) Notice that the instrument has been dishonored.
C) Notice that the instrument was issued as part of a series that is in default.
D) Notice that the instrument is overdue,notice that the instrument has been dishonored,or notice that the instrument was issued as part of a series that is in default.
E) Notice that the instrument is overdue or notice that the instrument has been dishonored,but not notice that the instrument was issued as part of a series that is in default.
Holder in Due Course
A legal term referring to a party that has acquired a negotiable instrument in good faith and for value, with certain protections against previous claims.
- Recognizing circumstances and notices that affect the status of a holder in due course.
Verified Answer
SM
Sierra MorinMay 21, 2024
Final Answer :
D
Explanation :
According to Uniform Commercial Code Section 3-302(a),if a holder has notice or is aware of any of the following defects,the holder cannot be a holder in due course: The instrument is overdue,the instrument has been dishonored,the instrument was issued as part of a series that is in default,the instrument has been altered or contains an unauthorized signature,there is a claim to the instrument,or another party has a defense or claim in recoupment to the instrument.
Learning Objectives
- Recognizing circumstances and notices that affect the status of a holder in due course.