A holder of a defective instrument cannot qualify as a holder in due course (HDC) if he or she has notice that the instrument is defective (HDC).

Question

Quizplus · Accepted Answer

This statement is true. In order to be considered a holder in due course, the holder of an instrument must meet certain criteria, one of which is that they must not have notice of any defects or claims against the instrument. If the holder has knowledge of defects or claims, they cannot qualify as a HDC.

A Holder of a Defective Instrument Cannot Qualify as a Holder