Asked by Kawinthida Kanajoth on Jun 10, 2024

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A holder may still become a holder in due course if he or she is aware of which of the following defects?

A) The instrument has been dishonored.
B) The instrument is overdue.
C) The instrument contains an unauthorized signature.
D) The instrument contains a misspelled name.
E) There is a claim to the instrument.

Unauthorized Signature

A signature placed on a document by someone not authorized by the proper entity or individual, potentially leading to legal issues.

Dishonored

refers to a financial instrument, such as a check or bill of exchange, that has been refused acceptance or payment.

Overdue

Overdue refers to a situation where a payment or obligation has not been met by its specified due date.

  • Absorb the specific traits and requirements needed to be designated as a holder in due course (HDC), and the associated benefits and legal protections granted to HDCs.
  • Gain insight into how adjustments, spelling errors, and unauthorized endorsements affect the legality of negotiable instruments.
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Qusai QwasmehJun 14, 2024
Final Answer :
D
Explanation :
A holder can still become a holder in due course even if aware of minor defects such as a misspelled name, as this does not fundamentally affect the validity or enforceability of the instrument. Other options listed typically disqualify one from achieving holder in due course status due to their impact on the instrument's negotiability or legitimacy.