Kris transfers a note, on which Liu is the maker, to Mia, who takes it for value and in good faith. Mia knows that Kris breached the contract underlying the note, giving Liu a defense against payment. With respect to this note, Mia is
A) a knowledgeable holder in due course.
B) an ordinary holder.
C) an ordinary holder in due course.
D) a knowledgeable acceptor.

Question

Quizplus · Accepted Answer

Mia does not qualify as a holder in due course because she is aware of the breach of contract by Kris, which gives Liu a defense against payment. Therefore, she is an ordinary holder, who takes the note for value and good faith.

Kris Transfers a Note, on Which Liu Is the Maker