Question

S1: A holder in due course is one who becomes the holder of an instrument not overdue. If the payee is issued an overdue instrument by the maker thereof, he is a holder not in due course

S2: The negotiable character of an instrument is generally not affected by the indorsements thereof

A. Both are false
B. Both are true
C. First is true
D. Second is true

Answer 1

Statement S1 is true; a holder in due course must receive the instrument before it is overdue. Statement S2 is also true; the negotiable character of an instrument is generally unaltered by indorsements. Therefore, both statements are true.

Step-by-step explanation:

The subject of the question pertains to the negotiation of financial instruments, particularly under business law, which encompasses the concepts of a holder in due course and the negotiability of an instrument. Statement S1 addresses the definition of a holder in due course, indicating that for one to be considered as such, they must hold an instrument that is not overdue. This statement is true, as a holder in due course must receive the instrument before it is due, in good faith, and without notice of any defects. Statement S2 discusses how the negotiable character of an instrument remains generally unaffected by indorsements. This statement is also true, as indorsements typically do not alter the negotiability of an instrument unless they include explicit conditions or restrictions. Hence, the correct answer is B. Both are true.