A holder of a negotiable instrument is:
A) anyone who has possession of an instrument.
B) anyone who is rightfully in possession of an instrument.
C) anyone who is in possession of an instrument that is payable to bearer or an identified person who is in possession of an instrument payable to that person.
D) anyone who is in possession of an instrument payable to that person.
E) anyone who is in possession of an instrument payable to that person if the person has indorsed the instrument.

Question

Quizplus · Accepted Answer

A holder of a negotiable instrument is someone who has possession of the instrument that is payable to bearer or an identified person who is in possession of an instrument payable to that person. This means that the instrument can be transferred to another person by simply transferring possession of it, without the need for additional documentation. Option A is too broad, as possession alone may not confer the rights of a holder. Option B implies a subjective judgment of rightfulness that could be contested, and options D and E are too narrow as they limit the definition of the holder to instruments payable only to the person in possession of it, without regard to the instrument itself.

A Holder of a Negotiable Instrument Is