A holder is on notice that an instrument is defective when the holder:
A) demands payment.
B) brings suit for the collection of an instrument.
C) gives a discharge or release from liability on the instrument.
D) Has actual notice of a defect

Question

Quizplus · Accepted Answer

A holder is on notice when they have actual knowledge of a defect, such as an alteration or forgery on the instrument. Demanding payment or bringing a suit for collection does not necessarily mean the holder is aware of any defects. Giving a discharge or release may actually imply that the instrument is valid and the holder is not contesting it.

A Holder Is on Notice That an Instrument Is Defective