What is the consequence of a defense to a negotiable instrument being a personal defense?
A) The instrument must be paid to any holder.
B) The maker or drawer has personal liability on the instrument.
C) The instrument must be paid despite the defense if the defense is being asserted against a holder in due course.
D) The instrument must be paid to any party presenting it for payment.
E) The defense is not effective against a holder of any kind.

Question

Quizplus · Accepted Answer

A personal defense is only effective between the parties involved in the transaction and does not affect a holder in due course who has taken the instrument in good faith and for value. Therefore, the instrument must still be paid even if a personal defense is being asserted against the holder in due course.

What Is the Consequence of a Defense to a Negotiable