Exam 23: Holder in Due Course and Transferability

An instrument that is payable to a specific payee or indorsed to a specific indorsee is called a bearer paper.

The ________ is a doctrine that says a holder who does not qualify as a holder in due course in his or her own right becomes a holder in due course if he or she acquires an instrument through a holder in due course.

A specially qualified indorsement can only be negotiated by indorsement and delivery.

The good faith test for an HDC applies to both transferor and transferee.

Value has been given by the holder if he or she acquires a security interest in or lien on an instrument.

A holder of a defective instrument cannot qualify as a holder in due course (HDC) if he or she has notice that the instrument is defective (HDC).

If a transferred negotiable instrument fails to qualify under Article 3 of the Uniform Commercial Code (UCC), it is known as a(n) ________.

If an instrument is payable to multiple persons using the word "and," then the instrument ________.

Which of the following indorsements can be negotiated just by delivery?

What is the difference between a holder and holder in due course?

Which of the following indorsements would be considered a nonrestrictive indorsement?

An order paper that is indorsed in blank becomes bearer paper.

Indorsements are required to negotiate bearer papers.

A restrictive indorsement can also be a bearer instrument.

Which of the following can be exchanged for cash by merely having possession of the instrument?

Which of the following is true of a qualified indorsement?

Which of the following is true of an unqualified indorsement?

Which of the following is true of a bearer paper?

Lisa buys a used car from Kelly. She pays 10 percent of the cost down and signs a negotiable promissory note promising to pay Kelly the remainder of the purchase price, with interest, in 12 equal monthly installments. At the time of sale, Kelly lied about the mileage of the automobile. Later, Kelly negotiated the note to Frances, who has no notice of the lie. Frances, a holder in due course (HDC), negotiated the note to Zoe, who is not an HDC. Which of the following is Zoe in regards to the promissory note?

A(n) ________ is an indorsement that states that it is for the benefit or use of the indorser or another person.