Holder in Due Course - Negotiable Instruments
Holder in Due Course is a legal term to describe the person who has the holder of a negotiable instrument if the following conditions are satisfied: its holder is deemed to be a holder for value as regards the acceptor and all To qualify as an HDC, the transferee must meet the requirements established by the UCC; The. following cases: Armstrong v. American to be a holder in due course must not only have taken the instrument for it is valid and effectual for all purposes in his hands, and he may enforce fils the conditions of this section because he is a " holder" under Section construed as such "unless the context otherwise requires. A holder in due course is a holder who has taken the instrument under the with one of the conditions enumerated lacking is not a holder in due course Generally, lesion or inadequacy of cause shall not invalidate a contract, unless there has All those situations which at common law were known as equitable defenses.
He must be entitled to the possession of the instrument in his own name and under a legal title. He must be entitled to receive or recover the amount from the parties concerned in his own name. The holder in due course is a particular kind of holder. The holder of a negotiable instrument is called the holder in due course if he satisfied the following conditions; The negotiable instrument must be in possession of the holder in due course. The negotiable instrument must be regular and complete in all respects.
He obtained the instrument for valuable consideration. He becomes the holder of the instrument before its maturity before the amount mentioned in it become payable. He has no cause to believe that any defect existed in the title of the person from whom he derived his title. The person who claims himself for value needs not himself give value. It may give the prior party. An indorsement in blank specifies no indorsee, and an instrument so indorsed is payable to bearer, and may be negotiated by delivery.
Blank indorsement; how changed to special indorsement.The negotiable instrument act, 1881 holder and holder in due course
But the mere absence of words implying power to negotiate does not make an indorsement restrictive. Effect of restrictive indorsement; rights of indorsee. But all subsequent indorsees acquire only the title of the first indorsee under the restrictive indorsement.
It may be made by adding to the indorser's signature the words "without recourse" or any words of similar import. Such an indorsement does not impair the negotiable character of the instrument. But any person to whom an instrument so indorsed is negotiated will hold the same, or the proceeds thereof, subject to the rights of the person indorsing conditionally. Indorsement of instrument payable to bearer.
Indorsement where payable to two or more persons. Effect of instrument drawn or indorsed to a person as cashier. Indorsement where name is misspelled, and so forth. Indorsement in representative capacity. Time of indorsement; presumption. Place of indorsement; presumption. Continuation of negotiable character. The indorser whose indorsement is struck out, and all indorsers subsequent to him, are thereby relieved from liability on the instrument.
Transfer without indorsement; effect of. But for the purpose of determining whether the transferee is a holder in due course, the negotiation takes effect as of the time when the indorsement is actually made. When prior party may negotiate instrument. But he is not entitled to enforce payment thereof against any intervening party to whom he was personally liable. Right of holder to sue; payment. What constitutes a holder in due course. When person not deemed holder in due course.
Notice before full amount is paid. What constitutes notice of defect. Rights of holder in due course. When subject to original defense. But a holder who derives his title through a holder in due course, and who is not himself a party to any fraud or illegality affecting the instrument, has all the rights of such former holder in respect of all parties prior to the latter.
Who is deemed holder in due course. But the last-mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder. When a person deemed indorser. Liability of irregular indorser.
Warranty where negotiation by delivery and so forth. But when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee. The provisions of subdivision c of this section do not apply to a person negotiating public or corporation securities other than bills and notes. Liability of general indorser. Liability of indorser where paper negotiable by delivery. Order in which indorsers are liable.
Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally. Liability of an agent or broker. Effect of want of demand on principal debtor.
§ HOLDER IN DUE COURSE. | UCC - Uniform Commercial Code | LII / Legal Information Institute
But except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers. Presentment where instrument is not payable on demand and where payable on demand. Where it is payable on demand, presentment must be made within a reasonable time after its issue, except that in the case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof.
What constitutes a sufficient presentment.
Instrument must be exhibited. Presentment where instrument payable at bank. Presentment where principal debtor is dead. Presentment to persons liable as partners. Presentment to joint debtors.
When presentment not required to charge the drawer. When presentment not required to charge the indorser. When delay in making presentment is excused. When the cause of delay ceases to operate, presentment must be made with reasonable diligence. When presentment for payment is excused. When instrument dishonored by non-payment.
- § 3-302. HOLDER IN DUE COURSE.
Liability of person secondarily liable, when instrument dishonored. When the day of maturity falls upon Sunday or a holiday, the instruments falling due or becoming payable on Saturday are to be presented for payment on the next succeeding business day except that instruments payable on demand may, at the option of the holder, be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday. Rule where instrument payable at bank.
What constitutes payment in due course. To whom notice of dishonor must be given. Notice given by agent. Effect of notice on behalf of holder.
Holder in Due Course
Effect where notice is given by party entitled thereto. When agent may give notice. If he gives notice to his principal, he must do so within the same time as if he were the holder, and the principal, upon the receipt of such notice, has himself the same time for giving notice as if the agent had been an independent holder.
A misdescription of the instrument does not vitiate the notice unless the party to whom the notice is given is in fact misled thereby. It may in all cases be given by delivering it personally or through the mails.
To whom notice may be given. Notice where party is dead. If there be no personal representative, notice may be sent to the last residence or last place of business of the deceased. Notice to persons jointly liable. Time within which notice must be given. Where parties reside in same place.
Where parties reside in different places. When sender deemed to have given due notice. Deposit in post office; what constitutes. Notice to subsequent party; time of.
Where notice must be sent. But where the notice is actually received by the party within the time specified in this Act, it will be sufficient, though not sent in accordance with the requirement of this section. Whom affected by waiver. When notice is dispensed with. Delay in giving notice; how excused. When the cause of delay ceases to operate, notice must be given with reasonable diligence.
When notice need not be given to drawer. When notice need not be given to indorser. Notice of non-payment where acceptance refused. Effect of omission to give notice of non-acceptance. When protest need not be made; when must be made. When persons secondarily liable on the instrument are discharged. Right of party who discharges instrument.