Skye asked Jim to buy a textbook for her at the County Community College campus bookstore. Skye wrote a check payable to the bookstore and left the amount blank for Jim to fill in the price of the book. The cost of the book was $100. Jim filled in the check for $200 before he got to the bookstore. The clerk at the bookstore took the check for $200 and gave Jim the book, plus $100 in cash.

Was the bookstore a holder in due course (HDC) of Skye’s check? Yes. One of the requirements for HDC status is a lack of ______________ that an instrument is defective. A party will not attain this status if they know, or have reason to know, that an incomplete instrument was later completed in an unauthorized manner.

______________ of a defective instrument is given when a holder has reason to know that a defect exists, given all of the facts known at the time. Here, the bookstore did not have ______________ that Skye’s check was incomplete when it was issued. The bookstore saw only a properly completed instrument.