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Holder in Due Course: Value and Good Faith

Learn about the requirement that, to be a holder in due course, the holder must take the instrument for value and in good faith.


If a person is entitled to enforce, that is, collect on a negotiable instrument and chooses to do so, the ease of such enforcement depends on whether the person seeking enforcement is a holder in due course.

Unlike a mere holder, a holder in due course takes the instrument free of most defenses and competing claims. Thus, it’s nearly impossible to prevent a holder in due course from collecting on the instrument.  

In this and the next several lessons, we’ll explore how one attains...