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B is corrent. The requirement is to identify the defense that may be asserted by a party with whom the holder in due course had not dealt. The holder in due course is subject toall personal defenses of persons with whom the holder in due course directly dealt. B is corrent because breach of contract is a personal defense that would have to be asserted by a party with whom the holder had dealt.
A is incorrect because discharge in an insolvency proceeding is a real defense that may be asserted against any holder.
C is incorrect because fraud in the execution is a defense that could be asserted against any holder.
D is incorrect because infancy is also a real defense.