Holder in due course
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Holder in due course

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The holder in due course (HDC) theory is a rule in commercial law that protects a purchaser of debt, where the purchaser is assigned the right to receive the debt payments. The theory insulates the purchaser of debt, or other obligation to pay, against charges that either party to the original transaction might have had against the other.
 
A holder in due course must-
 
1. Be a holder of a negotiable instrument
2. Take it for value
3. Take it in good faith
4. Take it without notice that it is overdue or dishonored, or that the instrument contains an un-authorized signature or an alteration, or that any person has any defense against or claim to it;
5. Take it without reason to question its authenticity due to apparent evidence of forgery, alteration, incompleteness, or other irregularity.

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