Question 1

List the claims and defenses available to a holder in due course under the Revised Article 3 of the Uniform Commercial Code.

Accepted Answer

The answer of List the claims and defenses available to...

Question 2

An art dealer sells a painting to Priya, telling her that it is an original painting made by a famous painter, and takes Priya's check for $500 in payment. Before making the sale, the art dealer was aware that the painting is not genuine, and it is a forgery. Can Priya claim any defenses against the payment made to the art dealer?

Accepted Answer

The answer of An art dealer sells a painting to...

Question 3

Any person who can trace his title to an instrument back to a holder in due course receives rights similar to a holder in due course even if he cannot meet the requirements himself. This is known as the _____.

Accepted Answer

The transferee of an instrument-whether or not the transfer is a negotiation-obtains those rights that the transferor had, including (1) the transferor's right to enforce the instrument and (2) any right as a holder in due course. This means that any person who can trace his title to an instrument back to a holder in due course receives rights similar to a holder in due course even if he cannot meet the requirements himself. This is known as the shelter rule in Article 3 of the Uniform Commercial Code.

Question 4

Explain personal defenses against the payment of negotiable instruments. Give suitable examples.

Accepted Answer

The answer of Explain personal defenses against the payment of...

Question 5

The Federal Trade Commission (FTC) regulation:

Accepted Answer

The Federal Trade Commission (FTC) has promulgated a regulation designed to protect consumers against operation of the holder in due course rule. The FTC rule applies to persons who sell to consumers on credit and have the consumer sign a note or an installment sale contract or arrange third party financing for the purchase.

Question 6

Explain the formal requirements for negotiation of order paper and bearer paper.

Accepted Answer

The answer of Explain the formal requirements for negotiation of...

Question 7

Which of the following is a partial defense against a holder in due course and a complete defense against a non-holder in due course?

Accepted Answer

Alteration of the completed instrument is a partial defense against a holder in due course (or a person having the rights of a holder in due course), and a complete defense against a non-holder in due course. A holder in due course can enforce an altered instrument against the maker or drawer according to its original tenor.

Question 8

How does one become a "holder in due course"?

Accepted Answer

The answer of How does one become a "holder in...

Question 9

The claims and defenses to payment of an instrument that go to the validity of the instrument are called _____.

Accepted Answer

There are some claims and defenses to payment of an instrument that go to the validity of the instrument. These claims and defenses are known as real defenses. They can be used as reasons against payment of a negotiable instrument to any holder, including a holder in due course (or a person who has the rights of a holder in due course).

Question 10

Which of the following is a real defense that can be used to avoid or reduce liability on a negotiable instrument?

Accepted Answer

There are some claims and defenses to payment of an instrument that go to the validity of the instrument. These claims and defenses are known as real defenses. Real defenses include discharge in bankruptcy.

Quiz 39: Negotiation and Holder in Due Course