Holder in Due Course - Receive Instrument in Good Faith

The video tutorial discusses the concept of a holder in due course, emphasizing the importance of receiving an instrument in good faith. It explains that the holder must not have any intent or knowledge of deceptive practices. The court uses both subjective and objective tests to determine good faith, examining the holder's actual knowledge and whether a reasonable person would perceive any wrongdoing. The tutorial highlights scenarios where a reasonable person might detect fraud, such as when a negotiable instrument is transferred at a suspiciously low value.

What is the primary requirement for a negotiation to be considered in good faith?

• The negotiation must involve a large sum of money.

• The negotiation must be completed quickly.

• The negotiation must be free of any intent to deceive.

• The negotiation must involve multiple parties.

What does the subjective test assess in the context of a holder in due course?

• Whether the holder had actual knowledge of any deceptive practices.

• Whether the holder had a financial interest in the negotiation.

• Whether the holder had a legal background.

• Whether the holder was present during the negotiation.

Which of the following is NOT a factor considered in the subjective test?

• Intent to deceive.

• Actual knowledge of fraud.

• Personal financial gain.

• Omissions of material information.

What does the objective test evaluate in a negotiation?

• The speed of the transaction.

• The perception of a reasonable person regarding any wrongdoing.

• The legal qualifications of the negotiators.

• The number of parties involved in the negotiation.

In the context of the objective test, what might indicate a deceptive intent in a transaction?

• A negotiable instrument being transferred by a shady individual for a small percentage of its value.

• A negotiable instrument being transferred by a reputable individual.

• A negotiable instrument being transferred with complete documentation.

• A negotiable instrument being transferred for its full value.