Asked by Rachel Romero on Jul 15, 2024

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Which of the following is not a requirement to be a holder in due course?

A) The holder must take the instrument for value.
B) The holder must take the instrument in good faith.
C) The holder must ensure through all reasonable means that the instrument has not been altered.
D) The holder must take the instrument without notice of any claim of a property or possessory interest in it.

Holder In Due Course

A person who has acquired a negotiable instrument in good faith and for value, and thus has certain rights above the original issuer or transferrers.

Altered

Changed or modified, often referring to a document that has been tampered with or adjusted in some way.

Possessory Interest

A right or interest in property that allows the holder physical control or occupancy of the property.

  • Understand the obligations and legal impacts connected to being recognized as a holder or holder in due course.
  • Understand the principle of value and the principle of good faith within the realm of negotiable instruments.
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Verified Answer

RB
Raquel BrownJul 16, 2024
Final Answer :
C
Explanation :
In order to become a holder in due course,a person who takes a negotiable instrument must be a holder and take an instrument: (1)for value, (2)in good faith (3)without notice that is overdue or has been dishonored or that there is any uncured default with respect to payment of another instrument issued as part of the same series, (4)without notice that the instrument contains an unauthorized signature or has been altered, (5)without notice of any claim of a property or possessory interest in it,and (6)without notice that any party has any defense against it or claim in recoupment to it.There is no requirement that the holder must ensure through all reasonable means that the instrument has not been altered.