If an Instrument Is Found to Be Negotiable Under the UCC

question 458

Multiple Choice

If an instrument is found to be negotiable under the UCC, it may be freely traded without concern for any existing contract responsibilities if the instrument is in the possession of a holder in due course. To be a holder in due course, one must:

• A) accept the transfer of the instrument with the same contract responsibilities as the person assigning the instrument
• B) give value for the instrument, accept it without knowledge of any defects (for example, that it is overdue), and take the instrument in good faith
• C) present himself as having knowledge or skill specialized to the transaction and regularly deal in that kind of transaction
• D) demonstrate that the instrument falls within the scope of Article 3 of the UCC, that the transaction is not for the sale of a tangible product, and that any defects in the title to the goods involved in the transaction is not known to the party
• E) none of the other choices, there are no special requirements

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Definitions:

Standard-Sized Cupboards

Cabinets or storage units that conform to common dimensions used in housing and furniture design.

Exemption Clause

An Exemption Clause is a part of a contractual agreement that seeks to limit the liability of one of the parties in certain situations, effectively exempting them from fulfilling certain obligations or liabilities.

Commercial Transactions

Activities involving the purchasing, selling, trading, and distribution of goods and services among businesses or entities.

Exemption Clause

A clause in a contract that restricts or eliminates the responsibility of one party for specific violations or circumstances.