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Exam 16: Transferability and Holder in Due Course

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Question 31

Multiple Choice

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Fact Pattern 16-1 Nina obtains a check payable to her order from Oran. Nina signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nina's signature. -Refer to Fact Pattern 16-1.When Patricia writes "Pay to Patricia" above Nina's signature, Nina's signature becomes​

A) ​a blank indorsement.
B) ​a qualified indorsement.
C) a special indorsement.
D) ​a forgery.

E) None of the above
F) A) and D)

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Question 32

Multiple Choice

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Secure Loan Company has notice that a promissory note is overdue if the note is a demand instrument and Secure Loan takes it​

A) ​an unreasonable time after its due date.
B) ​before its due date.
C) ​on its due date.
D) ​without noticing its due date.

E) None of the above
F) B) and D)

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Question 33

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Rochelle fraudulently induces Sybil to sign a note. Rochelle sells the note to Terry, who does not know of the fraud and takes the note for value and in good faith, and thus becomes an HDC. Terry sells the note to Ulrich, who sells the note back to Rochelle. Does Rochelle acquire Terry's HDC rights in the note?

A purchaser can become an HDC of an instrument even if it is so incomplete that an element of negotiability is lacking.

Vicenzo, in good faith and for value, gets from Wren a check "payable to the order of bearer." Vicenzo does not know that Wren stole the check. Vicenzo is​

Visible evidence that a signature on a check was forged will disqualify a purchaser from HDC status.

Fact Pattern 16-1 Nina obtains a check payable to her order from Oran. Nina signs the back and gives the check to Patricia. Patricia writes "Pay to Patricia" above Nina's signature. -Refer to Fact Pattern 16-1.After Patricia writes "Pay to Patricia" above Nina's signature, further negotiation of the check​

A holder takes an instrument for value if the holder has performed the promise for which the instrument was issued.

Noah transfers an instrument to Olivia in a form and by a means that makes Olivia a "holder." This is​

A restrictive indorsement does not destroy negotiability.

Kris transfers a note, on which Liu is the maker, to Mia, who takes it for value and in good faith. Mia knows that Kris breached the contract underlying the note, giving Liu a defense against payment. With respect to this note, Mia is​

Negotiating order instruments requires neither delivery nor indorsement.

An instrument is defective if it is overdue.

Often, whether a holder will be able to obtain payment on an instrument will depend on whether he or she is a holder in due course.

On the back of a check payable to Nero, he writes "Pay to Odell, without recourse" and signs it. This​

A holder cannot become an HDC if he or she has notice of any claim to the instrument or defense against it.

A blank indorsement can consist of a mere signature.

An instrument payable to two or more persons in the alternative requires the indorsement of both payees for negotiation.

A transfer by assignment can make it possible for a transferee to receive more rights in the instrument than the prior possessor had.

Usually, indorsements are qualified indorsements.