Exam 23: Transferability and Holder In Due Course

The transfer of a negotiable instrument in such a manner that the transferee becomes a holder is known as:

Which of the following is correct with regard to a holder in due course?

The advantage of a holder in due course over a simple holder of an instrument is that the holder in due course can:

Which of the following describes the shelter principle?

A holder cannot become a holder in due course to an instrument that is forged or altered.

A holder in due course can acquire greater rights than his transferor had.

Under what doctrine could a party who is aware that an instrument is overdue take that instrument and acquire the rights of a holder in due course?

Which of the following is true about the assignment and the negotiation of a negotiable instrument?

If Stanley Starre receives a check payable to "Stanley Starr," how can he endorse the check?

Billy,a minor,buys a car form Ajax Auto Dealers,signing a $2,000 negotiable installment note in payment.Ajax needs the cash,so it sells the note to Acme Finance Company,for its fair market value,indorsing the note in blank.The owner of Acme,who personally purchased the note,knew that Billy was a minor.Circumstances occur such that Acme can collect the note only if it is a holder in due course.Is Acme a holder in due course with respect to this note?

A person can become a holder in due course of an instrument that has been altered:

A blank indorsement is one that does not indicate a particular indorsee,and it also creates bearer paper.

Which of the following is true about the requirement for a holder in due course to give value for an instrument?

Bearer paper cannot be converted from order paper,but order paper may be converted to bearer paper.

To qualify as a holder in due course what must a holder do?

With respect to negotiable instruments,the "red light doctrine" prevents a holder from being a holder in due course if the holder has knowledge of a defense to the payment of the instrument.

A holder is a person in possession of a negotiable instrument regardless of whether it has been properly indorsed to him or to his order.

An assignment occurs when a nonnegotiable contract is transferred.

Paul Painter agreed to paint Harry Homeowner's house for $5,000.Paul never planned to actually paint the house,but made a habit of entering into contracts,taking partial or complete payment in advance,and never doing the work.Paul got his friend,Beth,to talk to Harry about how competent and honest Paul was,and explain that Harry should not be concerned about the quality of work or paying Paul in advance.Harry wrote Paul a $3,000 check 1 week before the painting was to be started.Paul transferred the check to Allison in exchange for Allison's car,which was worth $2,800.Before Allison had a chance to deposit the check,there were several news stories about Paul and all the fraud he had been committing.Allison then transferred the check to Beth,who then transferred it to Cathy.Beth gave Allison value for the check,and Cathy gave Beth value.Explain the applicability of the shelter principle in this situation.

A holder in due course takes an instrument free of which defenses?