GR8 Products, Inc., warrants its goods to be free of defects. Harold issues an instrument to GR8 to obtain goods that prove to be defective. With respect to payment on the instrument, Harold
A) is liable only to a subsequent holder of the instrument.
B) has a universal defense against it.
C) has a personal defense against it.
D) cannot avoid it.

Question

Quizplus · Accepted Answer

Harold has a personal defense against the instrument because the goods were defective, which is a breach of warranty. This defense can be used against the original payee but not against a holder in due course.