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 a holder in due course (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.

---

Definitions:

Federal

Pertaining to the central government of a country, as opposed to local or state governance.

State

A politically organized territory with a permanent population, defined territory, government, and the ability to enter into relations with other states.

Regressive Tax

A tax system where the tax rate decreases as the taxable amount increases, leading to a higher tax burden on lower-income earners.

Sales Tax

A tax imposed by governments on sales of goods and services, typically a percentage of the sale price paid by the consumer.