Mark acquires an instrument from a stranger under suspicious circumstances and at a high discount.This disqualifies him from acquiring HDC status because he did not ________.
A) give value for the instrument
B) check if the instrument was defective
C) take the instrument in good faith
D) check the authenticity of the instrument

Question

Quizplus · Accepted Answer

In order to acquire HDC (holder in due course) status, Mark should have taken the instrument in good faith, meaning that he didn't have any knowledge of the instrument's fraudulent or suspicious nature. However, as he acquired the instrument under suspicious circumstances and at a high discount, it disqualifies him from acquiring HDC status. Checking for authenticity and defects or giving value for the instrument may factor into the acquisition but do not necessarily determine whether he can acquire HDC status.

Mark Acquires an Instrument from a Stranger Under Suspicious Circumstances