Entrepreneur Auto Rentals owes Sole Saver Auto Dealership $20,000. Entrepreneur executes a note to Sole Saver as security for the debt. This security

Question

Quizplus · Accepted Answer

According to the Uniform Commercial Code, a negotiable instrument must have value to be considered valid, which means it must represent a legal obligation or property right. The note executed by Entrepreneur as security for the debt satisfies the value requirement for an HDC (Holder in Due Course) status because it represents an obligation to pay the $20,000 debt owed to Sole Saver. Therefore, the correct answer is (D) - this security satisfies the value requirement for HDC status.

Entrepreneur Auto Rentals Owes Sole Saver Auto Dealership $20,000