Under the red light doctrine a person cannot become a holder in due course of an instrument if there is obvious evidence of an irregularity in the instrument.

Question

Quizplus · Accepted Answer

The red light doctrine states that if there is "obvious evidence of forgery, alteration, or irregularity" on an instrument, then a person cannot become a holder in due course. This is designed to protect against fraud and ensure that innocent parties are not held liable for fraudulent or illegal behavior.

Under the Red Light Doctrine a Person Cannot Become a Holder