REG NINJA MCQ Question #: 1662 Category: 2C2 Negotiable Instruments

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    Topic
  • #198037
    OnToTheNextOne
    Participant

    NINJA Question –

    Im wondering about this question:

    Bond fraudulently induced Teal to make a note payable to Wilk, to whom Bond was indebted. Bond deli­vered the note to Wilk. Wilk negotiated the instrument to Monk, who purchased it with knowledge of the fraud and after it was overdue. If Wilk qualifies as a holder in due course, which of the following state­ments is correct?

    How is Monk a HDC is he knew of the fraud?

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  • #1369640
    Ira Gilligan
    Participant

    Going to bump this. Doesn't Monk's knowledge of the fraud disqualify him from being a HDC? Here is the full question:

    Bond fraudulently induced Teal to make a note payable to Wilk, to whom Bond was indebted. Bond deli­vered the note to Wilk. Wilk negotiated the instrument to Monk, who purchased it with knowledge of the fraud and after it was overdue. If Wilk qualifies as a holder in due course, which of the following state­ments is correct?

    A.
    Monk has the standing of a holder in due course through Wilk.

    B.
    Teal can successfully assert the defense of fraud in the inducement against Monk.

    C.
    Monk personally qualifies as a holder in due course.

    D.
    Teal can successfully assert the defense of fraud in the inducement against Wilk.

    Answer is A. A holder in due course has accepted a negotiable instrument for value, in good faith, and without notice that the instrument is overdue or dishonored, has irregularities, or that any person has a defense against paying it. Wilk was a holder in due course because the instrument was acquired for an existing debt. Monk is a holder in due course because the instrument was acquired for a purchase. A holder after a holder in due course has all the rights of the first holder in due course. Monk is a holder in due course because Wilk was a holder in due course.

    FAR - (scheduled 9/24/16)
    BEC -
    REG -
    AUD -

    #1369802
    Sticky Nicky
    Participant

    Wilk is a holder in due course because he didnt know about the fraud and gave value (indebtness). Monk doesnt need to have good faith,,,just give up some value for it. Technically he's a holder of a holder in due course so he has the same rights as Wilk

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