Any irregularity on the face of an instrument that creates an ambiguity as to the party to pay will bar HDC status.

Question

Quizplus · Accepted Answer

This statement is correct. According to the Uniform Commercial Code (UCC), any irregularity on the face of an instrument that creates an ambiguity as to the party to pay will prevent a holder in due course (HDC) from obtaining that status. This is because HDCs are only protected if they take a negotiable instrument in good faith and without notice of any defects or claims to it. An ambiguity on the face of the instrument can put the HDC on notice of potential problems and therefore prevent them from claiming HDC status.

Any Irregularity on the Face of an Instrument That Creates