Holder in due course

Holder in due course

Holder in due course, or (HDC) is a term used in law to refer to an innocent party who purchases a negotiable instrument for value without any apparent defect in the instrument nor any notice of dishonor. (Black's Law Dictionary 2nd Pocket ed. 2001 pg. 322). An HDC must purchase for value, meaning that he or she must pay for the property rather than simply being the beneficiary of a gift, although the value does not have to be 100% of the market value. Depending on the laws of the relevant jurisdiction, when a party sells a negotiable instrument with a non-apparent defect to an HDC, such as by selling them an instrument upon which another has a claim, that HDC takes good title to the property despite the competing claims of the other party unless the other party has a real defense, such as lack of capacity or fraud in the factum. Other parties with claim to ownership will have a cause of action against the party who sold the negotiable instrument to the HDC. Most states in the USA have codified into law Uniform Commercial Code Article § 3-302 defining an HDC and § 3-305 protecting the HDC from most claims by other parties.


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  • holder in due course — holder in due course: the holder of a negotiable instrument that is complete and regular on its face and that is taken in good faith and for value without notice that it is overdue or has been dishonored or that there is any defense against it or …   Law dictionary

  • holder in due course — In commercial law, a holder of an instrument who took it for value, in good faith and without notice of any claim or defense against it, U.C.C. No. 3 302(1), and who can enforce the instrument free from all claims and personal defenses. U.C.C. No …   Black's law dictionary

  • holder in due course — In commercial law, a holder of an instrument who took it for value, in good faith and without notice of any claim or defense against it, U.C.C. No. 3 302(1), and who can enforce the instrument free from all claims and personal defenses. U.C.C. No …   Black's law dictionary

  • holder in due course — Broadly, a bona fide holder for value without notice. 11 Am J2d B & N § 397. A holder of a negotiable instrument or document of title who has taken the instrument under the following conditions: that it is complete and regular upon its face; that …   Ballentine's law dictionary

  • holder in due course — the holder of a negotiable instrument that is complete and regular on its face who takes it in good faith and for value before it is overdue and without notice of its dishonor or of any infirmity in it or of any defect in the title of the person… …   Useful english dictionary

  • holder in due course — Date: 1882 one other than the original recipient who holds a legally effective negotiable instrument (as a promissory note) and who has a right to collect from and no responsibility toward the issuer …   New Collegiate Dictionary

  • holder in due course — a person 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. [1890 95] * * * …   Universalium

  • holder in due course — person that holds a promissory note that was legally transferred to him …   English contemporary dictionary

  • holder in due course — /ˌhəυldə ɪn dju: kɔ:s/ noun a person who holds a negotiable instrument, such as a bill of exchange, in good faith, without knowing of any other claim against it …   Dictionary of banking and finance

  • due course — See holder in due course. Collins dictionary of law. W. J. Stewart. 2001 …   Law dictionary

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