Which of the Following Requirements Has to Be Met for a Holder

question 38

Multiple Choice

Which of the following requirements has to be met for a holder to qualify as an HDC under the shelter principle?

• A)The holder must not be in possession of a prior negotiable instrument.
• B)The holder must have notice of a defense or claim against the payment of the instrument.
• C)The holder must have been a party to a fraud or an illegality affecting the instrument.
• D)The holder must have acquired the instrument from an HDC.

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Definitions:

Collusion

A secret agreement between two or more parties for a deceitful, illegal, or fraudulent purpose to deceive others.

Prescribed Controls

Specific procedures and policies implemented by a company to safeguard its assets, ensure accurate financial reporting, and comply with laws and regulations.

Petty Cash Fund

A small amount of cash on hand used for paying expenses too small to merit writing a check.

Bank Checking Account

A bank account that allows for easy access to funds through checks, debit cards, and electronic transfers, used for managing daily transactions.