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The Evening News Reported That Emerson Sold Fraudulent Negotiable Instruments

Question 30

Multiple Choice

The evening news reported that Emerson sold fraudulent negotiable instruments to investors around the country.Three days later McBride,who had not heard the news reports,bought some of the fraudulent negotiable instruments from a swindled investor.To be a holder in due course,McBride must:


A) meet only a subjective test of good faith, which asks whether the holder believed the transaction was honest in fact.
B) meet only an objective test of good faith, which asks whether the transaction appears to be commercially reasonable.
C) only show that he gave value for the instruments and had no notice of outstanding claims against the instruments.
D) meet both a subjective and an objective test of good faith, must be a holder, must have given value, and must have had no notice of outstanding claims or other defects.

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