Instructional Objectives for this activity:
Recognize the elements of a negotiable instrument, as well as the elements of rules affecting transferability and liability.

After reading the following scenario, respond to all of the following prompts:

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Is Carol a holder in due course? Why or why not?
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Let’s suppose that you go to your bank and write a check on your account payable to cash for $500. The teller gives you the cash without asking you to indorse the check. After you leave, the teller slips the check into his pocket. Later, the teller delivers it (without an indorsement) to his friend Carol in payment for a gambling debt. Carol takes your check to her bank, indorses it, and deposits the money.

  • Is Carol a holder in due course? Why or why not?


Hollowell, W.E. & Miller, R. L., (2014).  Business law text & exercises. (7th ed.) South-Western, Cengage Learning.

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