The good faith test applies to both the holder and the transferor of an instrument.

Question

Quizplus · Accepted Answer

The good faith test primarily applies to the holder of an instrument, assessing whether they have acted honestly and without knowledge of any defects in the instrument. The transferor's obligations are generally about warranties and ensuring the instrument is valid, but the concept of good faith specifically targets the behavior and knowledge of the holder.

The Good Faith Test Applies to Both the Holder and the Transferor