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Defenses against Enforcement

Learn about personal defenses, which generally cannot be asserted against a holder in due course, and real defenses, which can be.

Transcript

If a person is entitled to enforce a negotiable instrument, then that person may present the instrument for payment. However, such presentment is subject to any defense or counterclaim raised by the issuer.

The primary benefit of being a holder in due course is that a holder in due course takes the instrument free of nearly all defenses and claims against enforcement. Notice we said nearly all. Although a holder in due course takes the instrument free of third parties’ claims and personal...