Multiple choice

Mr. P, a student is working on part-time basis for a charitable trust. The trust makes payment for the part-time work and also makes payment of some stipend to help him to complete his studies. The payments are made to him by way of two separate cheques.

  1. On the cheque for work payment, he is holder in due course and for the cheque for stipend, he is holder.

  2. On the cheque for work payment, he is holder and for the cheque for stipend, he is holder in due course.

  3. On the both the cheques, he is holder in due course.

  4. On the both the cheques, he is holder.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Holder in due course means a person who must have the possession of the instrument. This is the basic difference between the Holder and Holder in Due Course. Holder in Due Course must obtain the instrument in Good Faith. If the instrument bears not-negotiable crossing, then no person can be a holder in due course. If the instrument bears A/C payee crossing and restricted endorsement, then no person can be a holder in due course. Forgery / theft / deceit do not convey any title. 

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