The core of this question lies in understanding the concept of a holder in due course (HDC) and the defenses available against such a holder under Florida’s Uniform Commercial Code (UCC) Article 3. A negotiable instrument is a writing that contains an unconditional promise or order to pay a fixed amount of money, payable on demand or at a definite time, payable to order or to bearer, and stating no other undertaking or instruction by the party giving the promise or order except as authorized by UCC § 3-104. For a holder to achieve HDC status, they must take the instrument for value, in good faith, and without notice that the instrument is overdue or dishonored or that there is any defense or claim to it, as per UCC § 3-302. Florida law, like the UCC, distinguishes between real defenses, which are generally available against all holders, including HDCs, and personal defenses, which are not. Fraud in the execution (also known as fraud in the factum) is a real defense. This occurs when the signer is deceived about the nature or essential terms of the instrument itself. For example, if someone is tricked into signing a promissory note believing it to be a receipt. In contrast, fraud in the inducement, where a party is deceived into signing an instrument based on false promises or misrepresentations about the underlying transaction, is a personal defense and is not effective against an HDC. In the given scenario, Amelia is induced by false promises regarding the quality of the yacht, which constitutes fraud in the inducement. Since Benjamin qualifies as a holder in due course because he took the note for value, in good faith, and without notice of any defect, Amelia’s defense of fraud in the inducement is personal and therefore not effective against Benjamin. Thus, Benjamin can enforce the note against Amelia.

The scenario presented involves a negotiable instrument that contains an acceleration clause. An acceleration clause allows the holder of the instrument to demand payment of the entire outstanding balance upon the occurrence of a specified event, such as default on an installment payment. Under Florida Statute § 673.1081(1), an instrument that is payable on demand or at a definite time is negotiable. The presence of an acceleration clause does not affect negotiability because the time of payment, while subject to acceleration, is still ascertainable. Specifically, Florida law, mirroring the Uniform Commercial Code (UCC) Article 3, permits instruments payable “on or before a stated date” or “on or at an identifiable time subject to acceleration.” The key is that the time of payment is not left to the discretion of the holder or made contingent on an uncertain event outside of the instrument’s terms. Therefore, an instrument with an acceleration clause, provided the acceleration is triggered by a specific event or condition outlined in the instrument, remains negotiable. The rationale is that the ultimate payment date, though potentially earlier than originally stated, is still a definite point in time once the condition for acceleration is met. This certainty in the payment term is crucial for negotiability.

Under Florida law, specifically Florida Statutes Chapter 673 (UCC Article 3), a holder in due course (HOC) takes an instrument free from most defenses and claims that a prior party might have against the instrument. To achieve HOC status, a person must take the instrument for value, in good faith, and without notice that it is overdue or dishonored or that it has any defense or claim against it. The concept of “notice” is crucial. Florida Statute 673.3021(1)(b) defines what constitutes notice. A person has notice of a defense or claim if the instrument is so incomplete and out of regular form as to raise a question of its proper character, execution, or ownership. This means that significant alterations or missing essential information could put a subsequent holder on notice of potential problems, thereby preventing them from qualifying as a holder in due course. If an instrument is so fundamentally flawed that a reasonable person would question its validity or authenticity, the holder cannot claim ignorance of these defects.

The core issue here revolves around the concept of a holder in due course (HDC) and the defenses available against them. Under Florida’s UCC Article 3, a person who takes an instrument for value, in good faith, and without notice of any claim or defense to it is a holder in due course. However, certain defenses are “real defenses” and can be asserted against even an HDC. These include infancy, duress, illegality of the transaction, and fraud in the factum (fraud that induces the obligor to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms). Fraud in the inducement, where the obligor knows they are signing an instrument but is deceived about the underlying transaction, is a personal defense and generally not assertable against an HDC. In this scenario, Dr. Aris was aware she was signing a promissory note and understood its essential terms; her belief that the investment would yield a 20% annual return was a misrepresentation about the investment’s profitability, constituting fraud in the inducement. Therefore, this personal defense cannot be raised against an HDC like Ms. Valencia, who acquired the note for value and without notice of the fraud. The critical distinction is between being deceived about the nature of the document itself (fraud in the factum) versus being deceived about the reasons for signing it (fraud in the inducement).

Under Florida law, specifically Florida Statutes Chapter 673 (UCC Article 3), a holder in due course (HDC) takes an instrument free from most defenses and claims that a prior party could assert against the original payee. To qualify as an HDC, a person must take the instrument for value, in good faith, and without notice that it is overdue or dishonored or that it has any defense or claim against it. The concept of “value” is broadly defined. For instance, taking an instrument as payment for a pre-existing debt can constitute value. Good faith is generally understood as honesty in fact and the observance of reasonable commercial standards of fair dealing. Notice is crucial; if a purchaser has knowledge of a defense or claim, or has reason to know of facts that would constitute a defense or claim under the circumstances, they cannot be an HDC. For example, if a note clearly states it is subject to a separate agreement, and the holder knows about that agreement and its potential for breach, they likely have notice of a defense. The question hinges on whether the purchaser’s knowledge of the underlying contract’s potential for default constitutes notice of a defense against payment on the instrument itself. Since the purchaser was aware of the specific terms of the underlying contract and the possibility of its breach, which would give rise to a defense, they cannot claim the status of a holder in due course. They had notice of a potential defense, thus failing the good faith and notice requirements for HDC status.

In Florida, under UCC Article 3, a holder in due course (HOC) takes an instrument free from most defenses that a party to the instrument might assert against the original payee. To qualify as a holder in due course, a person must take the instrument for value, in good faith, and without notice that the instrument is overdue or has been dishonored or that there is any defense against or claim to the instrument on the part of any person. Forbearance from suing on a pre-existing debt constitutes value. Good faith, as defined in Florida Statute § 671.201(20), means honesty in fact and the observance of reasonable commercial standards of fair dealing. Notice, as per Florida Statute § 671.201(25), includes actual knowledge, receipt of notice, or reason to know from all the facts and circumstances known at the time. A party who receives an instrument with knowledge of a forged signature cannot be a holder in due course because they have notice of a defense. A forged signature is a real defense that is generally not cut off by negotiation to a holder in due course, except in limited circumstances like a drawee bank paying a check with a forged drawer’s signature when the bank has a contractual relationship with the depositor that may shift liability. However, for defenses against the maker or drawer, such as fraud in the inducement or want of consideration, a holder in due course takes free of these personal defenses. The question describes a scenario where a note is negotiated to a third party. The third party paid value for the note and had no knowledge of any wrongdoing or defenses at the time of acquisition. The fact that the maker’s signature was forged on the original instrument is a critical element. Forgery of a signature is a real defense under UCC § 3-305(a)(1)(A), meaning it can be asserted against any holder, including a holder in due course. Therefore, the holder in due course would not be able to enforce the instrument against the purported maker whose signature was forged. The other options present scenarios that do not negate holder in due course status or do not involve a real defense that can be asserted against a holder in due course.

The scenario involves a promissory note that is payable on demand. Under Florida Statutes Chapter 673, specifically regarding commercial paper, a demand instrument is one that states it is payable on demand, at sight, or upon presentation. When a note is payable on demand, the statute of limitations for enforcing the instrument begins to run at the time of issuance or, if the note is undated, from the date of issuance. For a note payable on demand, the statute of limitations for enforcement generally begins to run at the time of issuance. If the note is undated, the UCC provides that the time of issuance is the date of the last signature on the instrument. Florida Statute 673.3115(2) states that for a note payable on demand, the statute of limitations for enforcement commences at the earlier of the time of demand for payment or the date of the last signature on the note. However, Florida Statute 673.113(1) also specifies that if an instrument is payable on demand, the statute of limitations for enforcement commences at the time of issuance. For an instrument issued on demand, the UCC, as adopted in Florida, generally provides that the statute of limitations begins to run at the time of issuance. If the instrument is undated, the time of issuance is the date of the last signature. Therefore, the statute of limitations begins to run from the date the note was issued, which is the date of the last signature on the instrument.

The scenario involves a negotiable instrument, specifically a promissory note, that has been altered. Under Florida’s UCC Article 3, a holder in due course (HDC) of an altered instrument can enforce it according to its original tenor, unless the alteration was fraudulent and the HDC had notice of it. However, if the alteration is material and fraudulent, and the holder is not an HDC, the instrument is discharged. In this case, the principal amount was increased from \$5,000 to \$15,000, which is a material alteration. If the bank, as the holder, paid the \$15,000, and the alteration was fraudulent, the bank’s recovery would be limited to the original tenor of the note, which is \$5,000, assuming the bank qualifies as an HDC. The question asks about the bank’s ability to enforce the note against the maker, Elara Vance. Since the bank paid the full amount and is likely an HDC (having taken the note for value, in good faith, and without notice of any defense or claim), it can enforce the note according to its original terms. Therefore, the bank can enforce the note for \$5,000. This principle is rooted in Florida Statutes Section 673.4071, which addresses alteration of instruments. An alteration is material if it changes the contract of any party. A fraudulent and material alteration generally discharges the instrument, but an HDC can enforce it according to its original tenor.

The scenario involves a promissory note that is payable to “bearer” and is undated. Under Florida Statute § 673.1101, a negotiable instrument is payable to bearer if it states that it is payable to bearer or to the order of bearer, or to a fictitious person or to any other person not the drawer or maker, or to cash or the order of cash, or any other indication that does not name a specific payee. Since the note is payable to “bearer,” it is a bearer instrument. Florida Statute § 673.1105 addresses the issue of undated instruments. If an instrument is undated, the time of issuance is the date of delivery if the instrument is payable on demand or at a definite time. For an instrument payable at a definite time, the date of issuance is the date of delivery. However, if the instrument is undated and is payable at a definite time, the holder may insert the correct date of issuance. If the holder does not insert the date, the instrument is due on demand. In this specific case, the note is undated and payable to bearer. While the statute allows for the insertion of a date by the holder, if no date is provided and it’s not otherwise specified, the instrument is generally considered due on demand. However, the crucial aspect here is the negotiability and the holder’s rights. A holder in due course of a bearer instrument takes it free of most defenses. The question asks about the enforceability against the maker. An undated note payable to bearer is still a negotiable instrument. The lack of a date does not inherently prevent its negotiability or enforceability, though it may affect when it is due if not specified otherwise. The maker cannot avoid liability simply because the note was undated, especially if it was properly delivered. The holder can enforce it.

This question tests the understanding of the “holder in due course” doctrine and its exceptions under Florida’s Uniform Commercial Code (UCC) Article 3, specifically focusing on the concept of notice of a defense. A holder in due course (HDC) takes an instrument free of most defenses and claims that a party to the instrument has against the original payee. However, an HDC is subject to defenses that are available against a holder in due course. These include real defenses such as infancy, duress, illegality, and fraud in the factum. Fraud in the factum occurs when a party is induced to sign an instrument without knowledge of its character or essential terms. In this scenario, Ms. Albright was presented with a document she believed to be a simple guest register, not a promissory note. This misrepresentation of the nature of the instrument constitutes fraud in the factum. Even if Mr. Sterling acquired the note for value and in good faith, he is subject to this real defense because fraud in the factum is a defense that can be asserted against an HDC. Therefore, Ms. Albright can assert this defense against Mr. Sterling.

The scenario involves a promissory note that is initially payable to “bearer.” Under Florida’s Uniform Commercial Code (UCC) Article 3, a negotiable instrument payable to bearer is transferable by mere delivery. When the holder of such a note, Ms. Anya Sharma, endorses it in blank by simply signing her name on the back, the note remains payable to bearer. The subsequent transfer to Mr. Ben Carter by delivery, without any further endorsement from Ms. Sharma, is a valid negotiation because the instrument is bearer paper. Therefore, Mr. Carter is a holder of the note. The question asks about the legal status of the note after these transfers. The UCC, specifically Florida Statute § 673.0205, addresses how an instrument becomes payable to bearer. An instrument is payable to bearer if it is payable to “cash,” “cashier’s check,” or similar terms, or if it is not payable to a specific person, or if it is payable to a fictitious person or to any other non-existent entity. While Ms. Sharma’s blank endorsement changes the character of the instrument from order paper (if it had been payable to a specific person) to bearer paper, the initial transfer to Mr. Carter was by delivery of a bearer instrument. The subsequent negotiation to Ms. Chloe Davis by Ms. Sharma’s blank endorsement followed by delivery, and then Mr. Carter’s endorsement in blank and delivery to Ms. Davis, means Ms. Davis is a holder. The critical point is that the note was initially payable to bearer. Even if it had been originally payable to order and then endorsed in blank, it would then become bearer paper. The question focuses on the *negotiability* and *status* of the instrument after these transfers, not necessarily who is the current holder in due course. The note, being initially payable to bearer, and then potentially becoming bearer paper through blank endorsements, continues to be negotiable by delivery. The core concept tested is the effect of bearer paper and blank endorsements on negotiability under UCC Article 3, as adopted in Florida.

The core issue here revolves around the concept of “holder in due course” (HDC) and the defenses available against such a holder under Florida’s Uniform Commercial Code (UCC) Article 3. For a transferee to qualify as a holder in due course, they must take the instrument (in this case, a promissory note) for value, in good faith, and without notice that it is overdue or has been dishonored or that any defense or claim to it exists. In this scenario, Mr. Abernathy receives the promissory note from Ms. Gable. We need to determine if he qualifies as an HDC. He gave value by agreeing to perform legal services, which constitutes value under UCC § 3-303. He took it in good faith. The crucial element is notice. The note was originally dated January 15, 2023, and was payable “on demand.” Florida law, like the UCC, generally considers demand instruments to be overdue as soon as they are issued. Therefore, Abernathy, by receiving the note on February 10, 2023, had notice that the instrument was overdue because it was a demand note and a reasonable time for payment had passed since its issuance. UCC § 3-304(a)(1) states that a note is overdue if it is payable on demand and the purchaser has notice that the demand has been made or that it is overdue. While the UCC generally presumes that a reasonable time for a demand instrument has passed after 30 days from issuance, the fact that it is a demand instrument means it is immediately due. Abernathy’s knowledge of the original issue date and the demand nature of the note on February 10th means he had notice it was overdue. Consequently, he cannot be a holder in due course. Since Abernathy is not an HDC, he takes the instrument subject to all defenses that would be available in an action on a simple contract, including fraud in the inducement. Fraud in the inducement is a real defense that can be asserted against a holder who is not an HDC. Therefore, Ms. Gable can assert the defense of fraud in the inducement against Mr. Abernathy.

The scenario involves a promissory note that contains a clause for acceleration upon the occurrence of a specific event, which is the maker’s insolvency. Under Florida Statute § 673.1081(1), an instrument is payable on demand if it states that it is payable on demand, at sight, or otherwise indicates that it is payable at the will of the holder. Alternatively, an instrument is payable on demand if no time for payment is stated. Florida Statute § 673.1081(2) states that an instrument is payable at a definite time if it is payable on expiration of a definite period of time after sight or acceptance, or at a fixed date or an ascertainable date. A key element for negotiability is that the time of payment must be ascertainable from the instrument itself. An acceleration clause that makes the instrument payable on demand or at a definite time does not destroy negotiability. In this case, the maker’s insolvency is an event that triggers acceleration. While insolvency can be a subjective determination, the UCC, as adopted in Florida, permits acceleration upon the occurrence of a specified event. The note clearly states it is payable “on demand or, if earlier, upon the maker’s insolvency.” This language establishes a definite time for payment, or at least a condition that triggers demand, which is permissible for negotiability. The question hinges on whether the “insolvency” trigger renders the payment time indefinite in a way that destroys negotiability. Florida law, following the UCC, allows for acceleration clauses. The UCC Official Comment 2 to UCC § 3-108 (which is mirrored in Florida Statute § 673.1081) clarifies that an instrument is payable on demand if it states that it is payable on demand, at sight, or otherwise indicates that it is payable at the will of the holder. It also states that an instrument is payable at a definite time if it is payable on expiration of a definite period of time after sight or acceptance, or at a fixed date or an ascertainable date. A clause allowing acceleration “at the will of the holder” or “when the holder deems himself insecure” is acceptable. While “insolvency” might seem subjective, it is often a legally defined state or a condition that can be objectively determined. The crucial point is that the event of insolvency, when it occurs, makes the payment due. Therefore, the note is negotiable because it is payable on demand, with an acceleration provision tied to a specific event. The note clearly specifies the conditions under which it becomes due.

The core issue here revolves around the negotiability of an instrument that contains a promise to do an act other than pay money. Florida Statute 673.3031 defines consideration as value given for a promise or performance. However, for an instrument to be negotiable under Florida’s UCC Article 3, the promise must be solely for the payment of money, unless other promises are incidental and do not affect the negotiability. The note in question promises to pay $5,000 and also to deliver 100 shares of XYZ Corporation stock. The delivery of stock is an act other than the payment of money, and it is not merely incidental to the payment obligation. This makes the instrument non-negotiable because it violates the requirement that the promise be for the payment of money only. Consequently, the instrument cannot be negotiated by endorsement and delivery, and a holder in due course cannot acquire rights in it. The fact that the stock delivery is to occur in Florida is irrelevant to the fundamental negotiability requirements of UCC Article 3. The scenario does not involve any prior endorsements or modifications that would alter the initial assessment of the instrument’s negotiability.

The core concept being tested is the holder in due course (HDC) status and its implications under UCC Article 3, specifically as adopted in Florida. For a party to be a holder in due course, they must take the instrument (in this case, a promissory note) for value, in good faith, and without notice of any defense or claim against it. The scenario describes a situation where a promissory note is transferred to a third party, Veridian Financial, after its maturity date. Under UCC § 3-302(a)(2), a holder cannot take an instrument in due course if it is overdue. Florida Statute § 673.3021(1)(c) mirrors this by stating that a holder takes an instrument in due course if the instrument is taken when it is overdue. Since Veridian Financial received the note on January 15, 2024, which is after the stated maturity date of December 31, 2023, Veridian Financial cannot qualify as a holder in due course. Consequently, Veridian Financial takes the note subject to all defenses and claims that were available against the original payee, which includes the maker’s defense of material alteration. Therefore, the maker can assert the defense of material alteration against Veridian Financial.

The scenario involves a promissory note that is payable on demand. Under Florida Statutes Chapter 673 (Uniform Commercial Code, Article 3), a demand instrument is generally considered to be due and payable immediately upon its creation. This means that the statute of limitations for enforcing the instrument begins to run from the date of issuance or, if issued in installments, from the date of the last installment. For a note payable on demand, the UCC generally provides that the cause of action accrues upon demand. However, Florida law, specifically as interpreted in relation to UCC Article 3, often treats a demand note as immediately due and payable without the need for an explicit demand unless the instrument itself specifies a particular time or event for demand. Florida Statute 673.3045 addresses the accrual of limitations for demand instruments, stating that the statute of limitations runs from the date of demand if the instrument requires a demand, or from the date of issuance if no demand is required. In the absence of specific terms requiring a formal demand, the instrument is effectively due upon its creation. Therefore, the six-year statute of limitations, as provided by Florida Statute 95.11(2)(b) for actions on promissory notes, would begin to run from the date the note was made. Given the note was made on January 1, 2017, and the lawsuit was filed on February 15, 2023, the six-year period would have expired on January 1, 2023. Thus, the action is time-barred.

The scenario involves a promissory note that was negotiated. The key to determining liability for the maker, Mr. Silas Croft, lies in the concept of a holder in due course (HDC) and the defenses available against such a holder. Under Florida Statute § 673.3051, a person against whom a negotiable instrument is enforced may assert defenses and claims in recoupment. However, Florida Statute § 673.3051(1)(a) enumerates real defenses that are available against all holders, including HDCs. These real defenses include infancy, duress, illegality of the transaction, and fraud in the factum. Fraud in the factum occurs when a party is induced to sign an instrument without knowledge or reasonable opportunity to learn of its character or essential terms. In this case, Mr. Croft was led to believe he was signing a lease agreement, not a promissory note. This misrepresentation about the nature of the document he was signing constitutes fraud in the factum. Since Ms. Anya Sharma took the note for value, in good faith, and without notice of any claim or defense, she is a holder in due course. However, fraud in the factum is a real defense that can be asserted even against an HDC. Therefore, Mr. Croft can assert this defense to avoid liability on the note. The other potential defenses, such as lack of consideration or fraud in the inducement, are generally not available against an HDC unless the HDC had notice of these defenses. Since the facts state Ms. Sharma took the note without notice, these would not be valid defenses against her. The question tests the understanding of the distinction between real defenses and personal defenses and their enforceability against a holder in due course under Florida’s UCC Article 3.

The scenario involves a promissory note that contains a clause stating “Payable on demand or, if not sooner paid, then in three equal annual installments starting one year from the date of this note.” This type of clause creates an instrument that is payable on demand but also provides an alternative payment schedule. Under Florida Statutes Chapter 673, specifically concerning negotiable instruments, an instrument is payable on demand if it states that it is payable “on demand” or “at sight” or otherwise indicates that it is payable on demand. Additionally, an instrument that is otherwise payable on demand is also considered payable on demand if it contains a provision for payment at a definite time that is subsequent to the date of the instrument. The presence of the installment payment clause, while offering an alternative, does not negate the demand feature. The holder of the note can still choose to demand immediate payment. Therefore, the note is a negotiable instrument payable on demand. The maturity date for the purpose of determining whether a holder is a holder in due course is the date on which the demand is made, or if the installment option is exercised by the maker and accepted by the holder, the dates of those installments. However, the fundamental negotiability and the holder’s right to demand payment are established by the “on demand” language, which is not superseded by the installment provision. The key is that the instrument allows for payment at any time at the holder’s discretion. The installment clause is an alternative, not a condition that delays the demandability.

The scenario involves a promissory note that was transferred by indorsement. The question revolves around determining the liability of an indorser, specifically concerning the concept of a qualified indorsement. In Florida, under UCC Article 3, an unqualified indorsement generally makes the indorser liable to the holder of the instrument if the instrument is dishonored. However, a qualified indorsement, typically indicated by the words “without recourse,” limits the indorser’s liability. Such an indorsement essentially means the indorser is transferring their rights in the instrument but not guaranteeing payment. Therefore, when an instrument is indorsed “without recourse,” the indorser is not obligated to pay the instrument if it is dishonored by the maker or drawee. This distinction is crucial for understanding the extent of an indorser’s warranty obligations. The explanation should focus on the legal effect of “without recourse” in the context of negotiable instruments, as governed by Florida’s adoption of UCC Article 3, and how it shields the indorser from liability upon dishonor. The UCC specifies that a qualified indorser does not warrant that the instrument will be paid by the maker or drawee.

The scenario involves a promissory note that was transferred by endorsement and delivery. The key issue is whether the transferee, Mr. Abernathy, qualifies as a holder in due course (HDC) under Florida’s UCC Article 3, specifically Florida Statutes Chapter 673. For a holder to be an HDC, they must take the instrument (1) for value, (2) in good faith, and (3) without notice that it is overdue or has been dishonored or that there is a defense or claim against it. In this case, Mr. Abernathy took the note as a gift, meaning he did not give value for it. Florida Statute 673.3021(1)(a) requires that the holder take the instrument for value. Since he did not provide value, he cannot be an HDC. Consequently, he takes the note subject to any defenses that would be available against the original payee, Ms. Gable. The defense of failure of consideration is a real defense that can be asserted against a holder who is not an HDC. Therefore, Mr. Abernathy’s claim is subject to the defense of failure of consideration.

The scenario involves a promissory note that is payable to order. Under Florida Statutes Chapter 673, which governs negotiable instruments and aligns with UCC Article 3, a holder in due course (HDC) takes an instrument free from most defenses that a party to the instrument might assert against the original payee. However, certain real defenses are still available against an HDC. These real defenses include infancy, duress that nullifies the obligation, fraud that induces the party to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms, discharge in insolvency proceedings, and, to the extent that the law of Florida governing the creation of the obligation provides, illegality of the transaction. In this case, Mr. Abernathy’s defense of fraud in the inducement, where he was misled about the nature of the investment but understood he was signing a note, is a personal defense. Personal defenses are generally cut off when the instrument is negotiated to an HDC. Ms. Davenport, having purchased the note for value, in good faith, and without notice of any claim or defense, qualifies as an HDC. Therefore, she can enforce the note against Mr. Abernathy, despite his claim of being defrauded into signing it. The fact that the note was made in Florida is relevant as Florida law, specifically Chapter 673, governs the transaction. The correct answer reflects that Davenport, as an HDC, can enforce the note against Abernathy, as fraud in the inducement is a personal defense cut off by HDC status.

The question revolves around the concept of a holder in due course (HDC) and the defenses available against such a holder under Florida’s Uniform Commercial Code (UCC) Article 3. Specifically, it tests the understanding of real defenses versus personal defenses. A real defense is a defense that can be asserted against any holder, including an HDC, while a personal defense is generally not effective against an HDC. Florida Statutes § 673.3051 outlines these defenses. Among the options provided, discharge in insolvency proceedings is considered a real defense. This means that if the drawer of a draft has been discharged in bankruptcy, this discharge can be asserted against an HDC who takes the instrument. Other defenses, such as breach of warranty or failure of consideration, are typically personal defenses and would not be effective against an HDC. Therefore, the insolvency proceeding discharge is the defense that can be raised against an HDC.

The question pertains to the concept of negotiability and the impact of certain clauses on an instrument’s status under UCC Article 3, as adopted in Florida. Specifically, it addresses the “sum certain” requirement and the treatment of additional terms. Under Florida Statutes Chapter 673, a negotiable instrument must contain an unconditional promise or order to pay a sum certain in money and be payable on demand or at a definite time. The inclusion of a clause that requires payment of a variable rate of interest, calculated based on an external index like the prime rate, does not destroy negotiability as long as the rate can be determined from the instrument itself or a readily ascertainable source. However, a clause that mandates payment of attorney’s fees and costs upon default introduces a contingency that is not solely tied to the payment of the principal sum and interest at a definite time or on demand. Such a clause, as interpreted by Florida law and UCC Article 3, renders the instrument non-negotiable because the total amount payable is not fixed or determinable at the time of issuance, violating the “sum certain” requirement in a way that goes beyond simple interest calculations. The instrument becomes an assignable contract right but not a negotiable instrument that can be freely transferred by endorsement and delivery to facilitate commerce.

The scenario involves a promissory note that contains a clause stating “This note is subject to the terms and conditions of the separate Loan Agreement dated January 15, 2023, between the maker and the payee.” Under Florida Statute Section 673.1041(1)(c), a negotiable instrument must contain an unconditional promise or order to pay a sum certain in money and no other promise, order, obligation, or power given by the movant except as authorized by this chapter. While a reference to another writing for rights as to collateral, prepayment, or acceleration is permissible under Florida Statute Section 673.1061(2), a promise or order that is made subject to or governed by another writing generally renders the instrument non-negotiable. This is because such a reference indicates that the promise or order to pay is conditional upon the terms of the referenced agreement, thereby destroying the certainty and independence required for negotiability. Therefore, the inclusion of the phrase “subject to the terms and conditions of the separate Loan Agreement” makes the promise to pay conditional, preventing the instrument from being a negotiable instrument under Florida law, specifically UCC Article 3. The core principle is that the negotiability of an instrument should be ascertainable from the instrument itself, without needing to consult external documents that might alter the payment obligation.

The question revolves around the concept of holder in due course (HDC) status and its implications for a negotiable instrument, specifically a promissory note, under Florida’s Uniform Commercial Code (UCC) Article 3. For a party to qualify as a holder in due course, they must take the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or that any defense or claim against it exists. In this scenario, the bank, as the transferee of the note from the original payee, received the note as collateral for a pre-existing debt owed by the payee. Under Florida Statute \(673.3031(1)(b)\), taking an instrument as security for a pre-existing claim constitutes taking for “value.” The scenario states the bank had no knowledge of any defenses or claims against the note when it took possession. Therefore, the bank satisfies the requirements of taking for value and without notice. The fact that the note was not yet due is also crucial, as taking an overdue instrument would preclude HDC status. The absence of any indication of dishonor or other infirmities further supports the bank’s potential HDC status. This status shields the bank from most personal defenses that the maker might have against the original payee, such as lack of consideration or fraud in the inducement, as long as the bank did not have notice of these defenses at the time of acquisition.

The question revolves around the concept of a holder in due course (HDC) and the defenses available against payment on a negotiable instrument under Florida’s Uniform Commercial Code (UCC) Article 3. A holder in due course takes an instrument free from all defenses except for certain real defenses. Real defenses are those that can be asserted against any holder, including an HDC. Personal defenses, on the other hand, are generally not effective against an HDC. In this scenario, the promissory note was obtained by fraud in the inducement. Fraud in the inducement occurs when a party is persuaded to enter into a contract or sign an instrument by misrepresentation of a material fact, but they understand the nature and effect of the instrument they are signing. This is a personal defense, not a real defense. Real defenses include issues like forgery, material alteration, discharge in insolvency proceedings, or incapacity of the maker to incur an obligation. Fraud in the execution, where the signer is deceived about the nature of the instrument itself, is a real defense. Since Mr. Abernathy can establish fraud in the inducement, and Ms. Gable is not a holder in due course because she had notice of the defect in the instrument (she knew it was obtained through misrepresentation), Mr. Abernathy can assert this personal defense against Ms. Gable. Even if Ms. Gable were an HDC, fraud in the inducement is a personal defense and would not be a defense against an HDC. However, the question asks what defense Mr. Abernathy *can* assert. He can assert the defense of fraud in the inducement against Ms. Gable, as she is not an HDC and is subject to all defenses that would be available in an action on a simple contract.

Elias Thorne, the original payee, endorsed the promissory note in blank. Under Florida Statutes Chapter 673, an endorsement in blank converts an instrument previously payable to a specific person into an instrument payable to bearer. Consequently, the note became bearer paper. Negotiation of bearer paper is accomplished by physical delivery. Mr. Finch obtained possession of the note from Thorne through delivery, thus becoming a holder of the bearer instrument. Subsequently, Mr. Finch delivered the note to Ms. Albright. As the note is payable to bearer, this physical delivery constitutes a valid negotiation to Albright. Therefore, Ms. Albright is in possession of an instrument payable to bearer, making her a holder. To be classified as a holder in due course (HDC), Ms. Albright would need to satisfy additional requirements beyond mere possession and negotiation by delivery. These requirements, as outlined in Florida’s UCC Article 3, include taking the instrument for value, in good faith, and without notice of any claim or defense against it or the instrument itself. The provided scenario does not contain information regarding whether Ms. Albright provided value, acted in good faith, or had any knowledge of potential defenses or claims related to the note. Thus, while her status as a holder is established by her possession of the bearer instrument, her status as a holder in due course remains undetermined based solely on the given facts.

The scenario involves a promissory note that is payable to “cash.” Under Florida’s Uniform Commercial Code (UCC) Article 3, a negotiable instrument must be payable to order or to bearer. An instrument payable to “cash” is generally considered payable to bearer. Florida Statutes § 673.01041(1) defines a negotiable instrument as an unconditional promise or order to pay a fixed amount of money, if it is payable to bearer or to order at the time it is issued or first comes into possession of a holder. An instrument is payable to bearer if it states that it is payable to bearer or to the order of bearer, or to a fictitious payee, or to any other indication that does not purport to name a specific payee. When an instrument is payable to cash, it is treated as payable to bearer. A holder in due course (HDC) takes an instrument free of most defenses and claims. To be an HDC, a holder must take the instrument for value, in good faith, and without notice that the instrument is overdue or has been dishonored or that there is a defense or claim against it. In this case, the bank, acting as a holder, took the note for value (by paying out funds based on it) and in good faith. Since the note is payable to bearer, possession of the note is sufficient to establish the bank’s right to enforce it. The maker’s argument that the note is not payable to a specific payee is incorrect because instruments payable to cash are treated as bearer instruments. The bank, as a holder of a bearer instrument, can enforce it against the maker. Therefore, the bank’s claim is valid.

Under Florida’s UCC Article 3, a holder in due course (HOC) status is crucial for acquiring rights to enforce a negotiable instrument free from most defenses. To achieve HOC status, a holder must take the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or that it contains an unauthorized signature or alteration or that any defense or claim exists against it. For value, an executory promise is generally not sufficient unless the instrument has been transferred in satisfaction of or as security for a antecedent debt. In this scenario, the promissory note was transferred to Ms. Anya Sharma as part of a larger settlement of a prior debt owed by the maker. This constitutes taking the instrument for value under Florida Statute § 673.3031, as it satisfies or secures an antecedent debt. Furthermore, there is no indication that Ms. Sharma took the note in bad faith or with notice of any defenses or claims. Therefore, she would likely qualify as a holder in due course.

The scenario involves a promissory note that contains a clause stating “This note is subject to the terms and conditions of the accompanying Service Agreement dated January 15, 2023.” This language creates an express reference to another document, thereby making the note non-negotiable. Under Florida Statute 673.1041(1)(c), a negotiable instrument must contain an unconditional promise or order. While a reference to another writing for information about rights or obligations is permissible, if the reference makes the promise or order subject to the terms of that other writing, it renders the instrument non-negotiable. In this case, the phrase “subject to the terms and conditions of the accompanying Service Agreement” clearly subordinates the promise to pay to the conditions and terms outlined in the Service Agreement, destroying the unconditional nature required for negotiability under Florida law. Therefore, the note cannot be negotiated by simple endorsement and delivery, and a holder in due course status is not attainable. The instrument is merely a contract for payment, governed by contract law rather than the specialized rules of Article 3 of the Uniform Commercial Code.