Which of the following is the result if a payee who receives an instrument with missing information completes the missing information in a way that is inconsistent with the intent of issuer, and the instrument has been clearly materially altered?

A) The person taking the instrument cannot become a holder in due course.
B) The alteration does not prevent a person taking the flawed instrument from becoming a holder in due course.
C) There is no effect so long as the payee can establish that he or she did not receive any more consideration than that to which the payee was entitled.
D) The instrument is considered materially altered, but it only prevents transfer to a holder in due course if the holder in due course had knowledge that the payee had done the alteration.
E) The instrument is considered materially altered, but it only prevents transfer to a holder in due course if the transferee participated in the material alteration.

Question

Barri’ Ragland-English · Accepted Answer

Final Answer : A, Explanation :  When an instrument is materially altered without the issuer's consent, it affects the ability of a person taking the instrument to become a holder in due course. Material alteration without proper authorization or consent can invalidate the instrument's original terms, making it difficult for a new holder to claim holder in due course status, as it undermines the integrity and agreed terms of the instrument.

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