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CSEET · Business Laws and Management · Elements of Law relating to Negotiable Instruments

Which of the following is NOT an essential requirement for a person to be a holder in due course of a promissory note payable to order?

Receiving the instrument directly from the maker is not required. A holder in due course needs consideration, must become payee or indorsee before maturity, and must have no sufficient cause to believe the transferor's title was defective.

  1. AHe became the payee or indorsee for consideration
  2. BHe became the payee or indorsee before the amount became payable
  3. CHe had no sufficient cause to believe any defect existed in the title of the transferor
  4. DHe must have received the instrument directly from the makerCorrect

Explanation

Section 9 requires consideration, becoming payee or indorsee of an order instrument, acquiring before maturity, and no sufficient cause to believe in a title defect. There is no requirement to receive it directly from the maker; an indorsee from an intermediate party can qualify.

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