Which of the following is true about the good faith requirement for becoming a holder in due course?
A) It applies to both the transferor and the transferee of a negotiable instrument.
B) The UCC provides no guidance regarding the meaning of good faith.
C) It is an objective test applied using the reasonable person standard.
D) It means honesty in fact in the conduct of the transaction in question.
E) It is an objective test based on a reasonable person.

Question

Quizplus · Accepted Answer

The good faith requirement for becoming a holder in due course means honesty in fact in the conduct of the transaction in question. It applies only to the transferee of a negotiable instrument and is an objective test based on the individual's honesty in fact at the time of the transfer. The UCC provides guidance regarding the meaning of good faith, stating that it involves honesty in fact and the observance of reasonable standards of commercial dealing.

Which of the Following Is True About the Good Faith