Holder in due course and holder?

Answer 1

Under the Uniform Negotiable Instruments Act, a holder in due course is one who meets two special pre-requisites:

# He became a holder of the check or note before it was overdue; and # He took it in good faith and for value, without any reason to know at the time the person selling it to him had defective title.

Otherwise, a holder is merely one who has received the check or note legally, by endorsement or delivey, and who is entitled to receive payment on the instrument.

Answer 2

A holder in due course can potentially have more rights than than the original party. A holder merely has the same rights. However, a Holder under a Holder Due course has the right from the original holder in due course. For instance, if someone give their son a check for $100.00, the son is Holder in Due Course, but if the bank gave the check to the father, the son will be the Holder under a Holder in Due Course, whereas, the father becomes the Holder in Due Course. I learned this in my Business Law class.

Answer 3

That refers to a person or other entity such as an LLC who has received a negotiable instrument in good faith and without notice that it is overdue, that there is any prior claim, or that there is a defect in the title of the person who negotiated it. A negotiable instrument is a very special piece of paper that can be passed from one person to another and, ultimately, exchanged for money.