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.

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The statement is true. The red light doctrine is a legal concept that prevents a holder from being a holder in due course if they have knowledge or notice of any facts that would indicate the negotiable instrument may be invalid or subject to a defense. This means that if a holder receives the instrument with warning signs or "red lights" about its validity, the holder cannot claim the full protection of a holder in due course.

With Respect to Negotiable Instruments,the "Red Light Doctrine" Prevents a Holder