Asked by Angela Pantoja on Jun 01, 2024
Verified
A person can become an HDC only if he or she knows or has reason to know that an instrument is defective and is willing to assume the risk of its dishonor.
HDC (Holder in Due Course)
A legal term referring to someone who has acquired a negotiable instrument in good faith for value and without notice of any defect.
Defective Instrument
A legal or financial document that contains errors, omissions, or flaws rendering it invalid or ineffective.
Dishonor
To refuse to accept or pay a draft or a promissory note when it is properly presented. An instrument is dishonored when presentment is properly made and acceptance or payment is refused or cannot be obtained within the prescribed time.
- Comprehend the circumstances that enable a person to attain the status of a holder in due course (HDC) and the safeguards provided to them.
Verified Answer
ZK
Zybrea KnightJun 05, 2024
Final Answer :
False
Explanation :
A person can become a holder in due course (HDC) without knowing that the instrument is defective. The status of HDC is generally obtained by taking the instrument for value, in good faith, and without notice of any defect at the time of acquisition.
Learning Objectives
- Comprehend the circumstances that enable a person to attain the status of a holder in due course (HDC) and the safeguards provided to them.