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    Holders and Negotiable Instruments

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    In order to become a holder in due course, one must take a negotiable instrument without notice of the following except:

    a. that the instrument is overdue
    b. that there is a defense against it
    c. that the instrument was signed by an agent
    d. that the instrument has been dishonored
    e. that there was a claim to it by another person

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    Solution Preview

    Your answer is B.

    Information about holder in due course:

    Holder in due course, or (HDC) is a term used in law to refer to an innocent party who purchases a negotiable instrument for value without any apparent defect in the instrument nor any notice of dishonor. (Black's Law Dictionary 2nd Pocket ed. 2001 pg. 322). An HDC must purchase for value, meaning that he or she must pay for the property rather than simply being the beneficiary of a gift, ...

    Solution Summary

    This response outlines the elements of a negotiable instrument a holder must take notice of.