Exam 23: Transferability and Holder In Due Course

If a payee's name is misspelled,the payee will be prevented from indorsing the instrument,as it may amount to fraud,depending on the jurisdiction the payee resides in.

Why are there so many different kinds of indorsements? Why is a restriction in an indorsement that limits payment to the named payee not effective? Shouldn't the parties be allowed to set these terms between themselves?

Even though an unperformed promise qualifies as consideration,it does not meet the value requirement for qualifying as a holder in due course.

Which of the following is the best description of an indorsement?

Which of the following is true about the good faith requirement for becoming a holder in due course?

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

A holder of a negotiable instrument is:

If Joe Johnson gives an instrument to Sally Smith that reads,"payable to Sally Smith and Roger Reed," either person's indorsement is sufficient to negotiate the instrument.

According to the UCC,a qualified indorsement is one that disclaims or limits liability on the instrument.

Can the payee of a negotiable instrument be a holder in due course?

If a check has been marked "payment refused - not sufficient funds" a person in possession of it can qualify as a holder in due course.

When a negotiable instrument is transferred,the holder has greater rights because he or she is not subject to some of the defenses that could otherwise have been raised against the transferor.

Being a holder is a prerequisite to being a holder in due course.

In an assignment,the assignee cannot receive greater rights than those held by the assignor.

An instrument that is bearer paper can be changed to order paper by a later indorsement.

How does the definition of value for purposes of holder in due course differ from the definition of consideration? Why do you think there is a difference? Should there be a difference?