Exam 23: Holder in Due Course and Transferability

________ are required to negotiate order paper,but they are not required to negotiate bearer paper.

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

Under the Uniform Commercial Code's ________ requirement,a person cannot qualify as a holder in due course (HDC)if he or she has noticed that the instrument is overdue.

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

A qualified indorsement puts limited liability on the indorser.

A(n)________ is an instrument that is payable to a specific payee or indorsed to a specific indorsee.

A(n)________ is an indorsement that has no instructions or conditions attached to the payment of the funds.

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.

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

Tilda purchases an automobile from Ronston.At the time of sale,Ronston tells Tilda that the car has had only one previous owner and has been driven only 25,000 miles.Tilda,relying on these statements,purchases the car.She pays 10 percent down and signs a promissory note to pay the remainder of the purchase price,with interest,in fifteen equal monthly installments.Ronston transfers the note to Patty.Tilda then discovers that the car has actually had three previous owners and has been driven 250,000 miles.Which of the following is the legal outcome if Patty is a holder in due course (HDC)?

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

Which of the following qualifications renders a person a holder in due course of a negotiable instrument?

An instrument that is not payable to a specific payee or indorsee is called an order paper.

A restrictive indorsement can also be a bearer instrument.

An instrument that is not payable to a specific payee or indorsee is known as a(n)________.

If there is no space for an indorsement on the instrument,a new instrument has to be made to accommodate the indorsement.

A special indorsement does not specify to whom the indorser intends the instrument to be payable.

A holder can convert a blank indorsement into a special indorsement by adding his or her signature on it.

What happens if the name of the indorsee or payee is misspelled in an indorsement?

Which of the following makes negotiable instruments transferable to a third party?