Ted gave Stanley a $300 negotiable note for repairs to his car.Stanley did not do the repairs,but indorsed the note to Nami who did not know of Stanley's lack of work and paid Stanley for its note.Nami gave the note to her daughter,Sopan,for Christmas and Sopan attempted to collect the note.What is Sopan's legal status?

Question

Quizplus · Accepted Answer

Sopan, although not a holder in due course herself, has the rights of a holder in due course because the note was indorsed to her by Nami, who was a holder in due course. Nami acquired the note without knowledge of Stanley's failure to perform the repairs and paid value for it, thus meeting the criteria for a holder in due course. The rights of a holder in due course can be transferred to subsequent holders, even if they did not give consideration themselves.

Ted Gave Stanley a $300 Negotiable Note for Repairs to His