Which of the Following Is True Regarding How a Holder

question 55

Multiple Choice

Which of the following is true regarding how a holder may take an instrument for value, but not become a holder in due course?

• A) The UCC provides that the only method by which a holder may take an instrument for value but not become a holder in due course is when the holder purchases the instrument at judicial sale or under legal process.
• B) The UCC provides that the only method by which a holder may take an instrument for value but not become a holder in due course is when the holder acquires an instrument through taking over an estate.
• C) The UCC provides that a holder may take an instrument for value but not become a holder in due course under the following two circumstances: (1) when the holder purchases the instrument at judicial sale or under legal process, and (2) when the holder acquires an instrument through taking over an estate.
• D) The UCC provides that a holder may take an instrument for value but not become a holder in due course under the following three circumstances: (1) when the holder purchases the instrument at judicial sale or under legal process, (2) when the holder acquires an instrument through taking over an estate, and (3) when the holder purchases the instrument as part of a bulk transaction not in the regular course of business of the transferor.
• E) The UCC does not recognize circumstances under which a holder may take an instrument for value but not become a holder in due course, although under common law, a person who acquired an instrument through taking over an estate was classified as a holder but not a holder in due course.

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