Exam 29: Liability of the Parties Under Negotiable Instruments

A person cannot become a holder through a holder in due course unless that person satisfies the requirements for holder in due course status.

Manuel sued Patricia on a promissory note.Patricia admitted signing the note, but raised the defense that Manuel was not a holder in due course.Can Manuel recover without proving that he is a holder in due course?

To have the status of a holder in due course, a person must first be a holder.

A holder in due course must meet all of the following conditions except:

Bad faith may exist because a transferee takes an instrument under suspicious circumstances.

Value is similar to consideration..

A contract signed by a minor raises a universal defense against any kind of holder.

Jose receives a promissory note from his grandmother as a birthday present.Is Jose a holder in due course (HDC) with respect to the note?

A holder is on notice that an instrument is defective when the holder:

If a person signs a negotiable instrument because he is fraudulently deceived regarding its nature or essential terms gives the holder a universal defense..

A person who acquires a negotiable instrument with notice of a defense:

The FTC rule concerning holders in due course is confined to consumer credit transactions.

Economic duress, in the form of a reluctance to enter into a financially demanding instrument, is a universal defense.

A holder who is neither a holder in due course nor a holder through a holder in due course is subject to every defense, just as though the instrument were not negotiable.

Presentment occurs when the primary party refuses to pay an instrument according to its terms.

An altered instrument can be enforced according to its original terms.

In 1976 the FTC adopted a rule that expands the rights of a holder in due course in a consumer credit transaction.

A negotiable promissory note was issued by Gold.It was properly issued in all ways.Nevertheless, the payee managed to alter the note and raise the amount from $500 to $5,000.A holder in due course presented the note for payment to Gold who discovered the alteration.In this case:

A holder can recover from any of the parties who are liable on the instrument, regardless of the order of the signatures on the instrument.

Which of the following will not be considered value in connection with determining holder in due course status?