A Payee Can Never Be Considered a Holder in Due

question 4

True/False

A payee can never be considered a holder in due course.

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Definitions:

Preexisting Duty

A legal concept referring to a duty that a party is already legally obliged to perform, which cannot serve as consideration for a new contract.

Adequate Consideration

A value that is fair and reasonable under the circumstances for both parties involved in a contract, not necessarily equal in monetary terms but sufficient to support the agreement.

Payment In Full

A payment that settles a debt or obligation completely, leaving no remaining balance or outstanding dues.

Accepted Check

An accepted check is a check that the drawee bank has certified as good for payment, ensuring the availability of funds when presented.