[Answer/discuss the question below. Or check Mercantile Law Instructions; Mercantile Law Essay Questions: 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10; Mercantile Multiple Choice Questions: 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15; See also 2013 Bar Exam: Information, Discussions, Tips, Questions and Results]
Arnold, representing himself as an agent of Brian for the sale of Brian’s car, approached Dennis who appeared interested in buying the car. At Arnold’s prodding, Dennis issued a crossed check payable to Brian for P25,000.00 on the understanding that the check would only be shown to Brian as evidence of Dennis’ good faith and interest in buying the car. Instead, Arnold used the check to pay for the medical expenses of his wife in Brian’s clinic after Brian, a doctor, treated her.
Is Brian a holder in due course (HIDC)? (1%)
(A) Yes, Brian is a HIDC because he was the payee of the check and he received it for services rendered.
(B) Yes, Brian is a HIDC because he did not need to go behind the check that was payable to him.
(C) No, Brian is not a HIDC because Dennis issued the check only as evidence of good faith and interest in buying the car.
(D) No, Brian is not a HIDC because Brian should have been placed on notice: the check was crossed in his favor and Arnold was not the drawer.
(E) No, Brian is not a HIDC because the requisite consideration to Dennis was not present.