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Principles of Business Law

Principles of Business Law

Holder in due Course

Principles of Business Law


Holder

The holder of a negotiable instrument means any person


entitled to the possession of the instrument in his own name
and to receive or recover the amount due thereon from the
liable thereto.
They must be:
Entitled to the possession of the instrument in his own name
Entitled to receive or recover the amount due thereon from
the parties liable thereto

Principles of Business Law


Holder in due course
The holder in due course means any person who for consideration become the
possessor of a negotiable instrument if payable to bearer, or the payee or
indorsee thereof if payable, and without sufficient cause to believe that any defect
existed in the title of the person from whom he derived his title
He must be a holder
He must be a holder for valuable consideration
He must have become the holder of the negotiable instrument before its maturity
He must take the negotiable instrument complete and regular on the face of it
He must have become holder in good faith

Principles of Business Law


Privileges of a Holder in due course
He gets a better than that of the transferor
Privilege in case of inchoate stamped instruments
Liability of prior parties
Privilege in case of fictitious bills
Privilege when an instrument delivered conditionally is negotiated
Estoppel against denying original validity of instrument
Estoppel against denying capacity of payee to endorse

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