Sherry lies and states to Candy that the note she is signing is merely an acknowledgement of debt. It is in fact a promissory note.

Candy is the Maker. However, Candy is an an older, savvy business person who has experience and knowledge in the business world.

Candy signs as she is in a hurry.

Sherry then turns the note over to Eve for a cash price.

However, Eve does not know of the fraud. Indeed, she takes the note for value and in good faith.

• Research "Shelter Principle" on the Internet. Your textbook does not have sufficient information on the "Shelter" principle.
• Questions:
  • Part One:
    • Is Eve a Holder? First, define the elements of "Holder" status. Next, explain why/why not Eve is a Holder.
    • Is Eve an HDC? First, define the elements sof HDC status. Next, explain why/why not Eve is an HDC.
  • Part Two:
    • HDC's have greater rights to seek payment than Holders. If an HDC were to seek payment from the Maker, Candy, does Candy have a universal defense to avoid paying an HDC?
    • What is the effect of Candy's "rushing" and "sophistication" in regard to her possible defenses? In other words, is it material that she is "experienced?" Explain the nature of Candy's transaction.