25 & 25

A holder takes an instrument for value by promising to perform or give value in the future.

False

A purchaser can become an HDC of an instrument even if it is so incomplete that an element of negotiability is lacking.

False

A transfer by assignment can make it possible for a transferee to receive more rights in the instrument than the prior possessor had.

False

An instrument "payable to the order of bearer" is neither an order instrument nor a bearer instrument.

False

Negotiating order instruments requires either delivery or indorsement but not both.

False

On a cashier's check, the drawer is also always the payee.

False

To be negotiable, an instrument must be payable on demand.

False

A holder cannot become an HDC if he or she has notice of any claim to the instrument or defense against it.

True

A holder is any person in possession of a negotiable instrument that is payable either to the bearer or to an identified person who is the person in possession.

True

A holder takes an instrument for value if he or she accepts the instrument in payment of a preexisting obligation.

True

The checks that you wrote are negotiable instruments that act as substitutes for cash.

True

Merry draws a check payable to "Cash" and presents it to National Bank for payment. This instrument is

a bearer instrument.

Fact Pattern 26-1B Destiny obtains a check payable to her order from Eugenia. Destiny signs the back and adds the notation "without recourse." Refer to Fact Pattern 26-1B. Destiny's signature and the notation "without recourse" constitute

a qualified indorsement.

Refer to Fact Pattern 26-1B. After Destiny signs the back and adds the notation "without recourse," she adds, "Pay to Florence." This constitutes

a special qualified indorsement.

Efron borrows money to pay his tuition and signs a note payable to First Citizens Bank. The bank assigns the note to Guaranty Bank. The assignment

does not affect Efron's obligation to pay the note as promised.

Cricket signs a check payable to the order of Discount Warehouse, Inc., that does not include a date. This check is

negotiable.

Refer to Fact Pattern 26-1B. By writing "without recourse" with her signature, Destiny

relieves herself of liability on the instrument.

Sarah has a checking account at Secure Bank. Sarah buys her roommate Sophie's two tickets to a Broadway musical for $200. Sarah writes Sophie a check for the tickets. In this situation, Secure Bank is

the drawee.

To obtain a business license, Bess writes a check to a certain state agency. Bess is

the drawer.

Bowie is a holder of a promissory note obtained from Credit Lenders, Inc. Regarding the defenses against payment of the note to which Credit Lenders is subject, Bowie, as an ordinary holder, is subject to

the same defenses.