Question

Edna is the payee of a bearer instrument-a promissory note in the amount of $10,000. Flem offers to irrigate Edna's ranch next week in exchange for the note. She agrees and delivers the note to Flem. Flem is

A. not an HDC, because he did not yet give value for the instrument.

B. an HDC, because he promised to perform services at a future date.

C. not an HDC, because he did not acquire the instrument in good faith.

D. an HDC, because the transferor was the original payee on the note.

Answer 1

Based on the agreement between Edna and Flem for the latter to irrigate the ranch of the former, Flem is A. not an HDC, because he did not yet give value for the instrument.

Why is Flem not an HDC?

Flem cannot be considered a Holder in Due Course because Flem has not yet irrigated the ranch.

This means that they have not yet fulfilled their side of the bargain and so cannot fully lay claim to the promissory note, and receive the debt payments therein.

In conclusion, option A is correct.

Find out more on promissory notes at https://brainly.com/question/6614917.