Which of the following is NOT a requirement to be a holder in due course?

• A. Proper negotiation
• B. Paid value
• C. Knowledge of any defenses or claims against the instrument
• D. Good faith

Answer: (C)

The important idea here is the criteria for becoming a holder in due course under the UCC. To be a holder in due course, you must take the instrument for value, in good faith, and without notice of any defenses or claims against it, and you must have the instrument properly negotiated to you. Knowledge of any defenses or claims is not required; in fact, having knowledge would mean you do not have the required lack of notice. The other elements—proper negotiation, paid value, and good faith—are actual requirements for HDC status, while the stated choice describes awareness of defenses rather than the absence of notice.