Edie is the payee of a bearer instrument-a promissory note in the amount of $1,000. Frank offers to irrigate Edie's ranch next week in ex?change for the note. Edie agrees and delivers the note to Frank. Frank is
A) an HDC, because he promised to perform services at a future date.
B) an HDC, because the transferor was the original payee on the note.
C) not an HDC, because he did not acquire the instrument in good faith.
D) not an HDC, because he did not yet give value for the instrument.

Question

Quizplus · Accepted Answer

To be an HDC, Frank must meet four requirements: he must take the instrument for value, in good faith, without notice of defects in the instrument or claims to it, and he must take the instrument either as a holder or as a remote party who complies with specific requirements. In this case, Frank has only given a promise to perform services in exchange for the instrument, so he has not yet given value for it. Therefore, he is not an HDC.

Edie Is the Payee of a Bearer Instrument-A Promissory Note