PA Bar Practice Questions - Pennsylvania Bar Examination Exam

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A holder of a negotiable promissory note takes the note for value, in good faith, and without notice of any defense or claim to it. The maker later asserts a personal defense (such as a failure of consideration in the underlying transaction). Under UCC Article 3, what is the status of the transferee?

The transferee is a mere assignee subject to all defenses The transferee is a holder in due course who takes free of personal defenses The transferee cannot enforce the note at all The transferee takes subject to every defense, including real defenses only

Correct Answer:

The transferee is a holder in due course who takes free of personal defenses

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