If a person knows that an instrument is overdue or has been dishonored, he cannot become a holder in due course.

Question

Quizplus · Accepted Answer

According to the Uniform Commercial Code (UCC), a person cannot become a holder in due course if they have knowledge that an instrument is overdue or has been dishonored. This is because a holder in due course is someone who acquires the instrument in good faith and for value, without notice of any defects or claims against it. Knowledge of dishonor or overdue status would be considered notice of a defect, and therefore precludes one from being a holder in due course.

If a Person Knows That an Instrument Is Overdue or Has