Question

On May 15, 2015, Jason indorsed a check dated January 15, 2015, and payable by him to ALS Check Cashing Service. ALS:

a. can be a holder in due course, even though the check is antedated.
b. cannot be a holder in due course as it has notice that the instrument is overdue.
c. cannot be a holder in due course only if ALS contacted the drawer who agreed to honor the check.
d. can be a holder in due course only if ALS contacted the drawee who agreed to honor the check.

Answer 1

ALS cannot be a holder in due course for the check, as the check was indorsed after a period which would reasonably be considered overdue, thus giving ALS notice of the potential overdue status of the check according to UCC guidelines.

Step-by-step explanation:

The question you're asking relates to whether ALS Check Cashing Service can be a holder in due course for a check that was dated on January 15, 2015, but indorsed by Jason on May 15, 2015. According to the Uniform Commercial Code (UCC) which governs commercial transactions in the United States, a holder in due course is a party who has taken an instrument for value, in good faith, and without notice that it is overdue, among other requirements. Since the check in question was indorsed four months after its date, ALS would have notice that the instrument is potentially overdue, as checks are typically considered overdue if presented for payment after a certain period past their date – often within 90 to 180 days. Therefore, answer (b) ALS cannot be a holder in due course as it has notice that the instrument is overdue, appears to be the correct answer.