Sarah received a negotiable instrument as a birthday present and is now a holder in due course of the instrument.

Negotiable Instrument

A written document that is signed by the maker or drawer and that contains an unconditional promise or order to pay a certain sum of money on delivery or at a definite time to the bearer or to order.

Holder in Due Course

A legal term describing a party who has acquired a negotiable instrument in good faith and for value, thereby having certain protections against defenses and claims.