holder in due course


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Holder in Due Course

An individual who takes a Commercial Paper for value, in Good Faith, with the belief that it is valid, with no knowledge of any defects.

The Uniform Commercial Code (UCC) defines a holder in due course as one who takes an instrument for value in good faith absent any notice that it is overdue, has been dishonored, or is subject to any defense against it or claim to it by any other person.

holder in due course

n. one holding a check or promissory note, received for value (he/she paid for it), in good faith, and with no suspicion that it might be no good, claimed by another, overdue, or previously dishonored (a bank had refused to pay since the account was overdrawn). Such a holder is entitled to payment by the maker of the check or note. (See: bona fide purchaser)

holder in due course

a person who has taken a bill of exchange in good faith and for value before it was overdue and without notice of previous dishonour or of any defect in the title of the person who negotiated or transferred the bill. A holder in due course can negotiate the bill further and stands to be recompensed if it is dishonoured by the drawer, acceptor or other endorsee. The original payee ofa cheque is not a holder in due course.