A taker of a negotiable instrument may be denied the status and protection of a holder in due course where:

Question

Quizplus · Accepted Answer

The close-connection doctrine may apply when the taker of a negotiable instrument has a close relationship with the person who transferred the instrument, such as being an employee or family member. In such cases, the taker may be denied holder in due course status and protection. Choices A and C are incorrect because being a consumer or having bearer paper does not automatically deny holder in due course status. Choice D is incorrect because there must be a specific reason for a taker to be denied holder in due course status.

A Taker of a Negotiable Instrument May Be Denied the Status