Jill, in good faith and for value, gets from Kiley a negotiable bearer instrument. Jill does not know that Kiley stole the instrument. Jill is
A) an HDC.
B) not an HDC, because Kiley did not acquire the instrument for value.
C) not an HDC, because Kiley did not acquire the instrument in good faith.
D) not an HDC, because the instrument is a bearer instrument.

Question

Jill, in good faith and for value, gets from Kiley a negotiable bearer instrument. Jill does not know that Kiley stole the instrument. Jill is​
A) an HDC.​
B) ​not an HDC, because Kiley did not acquire the instrument for value.
C) ​not an HDC, because Kiley did not acquire the instrument in good faith.
D) ​not an HDC, because the instrument is a bearer instrument.

Quizplus · Accepted Answer

According to the UCC, in order to be a holder in due course, a person must acquire the instrument for value, in good faith, without notice of any claims or defenses to the instrument. In this case, Jill acquired the instrument for value (in exchange for something of worth), in good faith (without knowledge of any wrongdoings by Kiley), and since it is a negotiable bearer instrument, possession alone is enough to establish ownership. Therefore, Jill is an HDC.

Jill, in Good Faith and for Value, Gets from Kiley