A person who is a holder in due course of a negotiable instrument is considered which term?

A person who is a holder in due course of a negotiable instrument is considered which term?

• A. Possession
• B. Owner
• C. Public Servant
• D. Omission

Answer: (B)

Holding in due course means you have the enforceable right to collect on the instrument and, in effect, own the right to its payment. This status goes beyond mere possession; it makes you the owner of the instrument’s claim, with the power to transfer that right by negotiation and to enforce payment free from many defenses that could be raised against the original holder. Possession alone doesn’t guarantee those rights, and the other terms aren’t relevant to this concept. To become a holder in due course, you must take the instrument for value, in good faith, and without notice of any defects or claims.

Holding in due course means you have the enforceable right to collect on the instrument and, in effect, own the right to its payment. This status goes beyond mere possession; it makes you the owner of the instrument’s claim, with the power to transfer that right by negotiation and to enforce payment free from many defenses that could be raised against the original holder. Possession alone doesn’t guarantee those rights, and the other terms aren’t relevant to this concept. To become a holder in due course, you must take the instrument for value, in good faith, and without notice of any defects or claims.