For an HDC to Take an Instrument "In Good Faith

question 36

Multiple Choice

For an HDC to take an instrument "in good faith," how does the UCC define good faith?

• A)Good faith is not defined;it is left to the judgment of the individual HDC.
• B)Whether the holder himself acted reasonably when taking the instrument.
• C)Using the proper degree of caution that an objective,reasonable holder would have.
• D)Whether the holder himself acted honestly when taking the instrument.
• E)Under reasonable commercial standards of fair dealing.

---

Definitions:

Liable

Liable means being legally responsible for an action or outcome, often involving the obligation to make restitution or compensation.

Void Title

A legal status indicating that a title to a property is invalid or ineffective, due to some defect in the formation of the title.

Good Faith Purchaser

An individual who buys property without knowledge of any existing claims or disputes over it, thereby gaining protected ownership status.

Bulk Transfer

A term from commercial law referring to the transfer of all or a substantial part of a business's inventory or equipment in one transaction.