Holder in Due Course (HDC) doctrine is a rule in commercial law that protects a purchaser of debt.

The doctrine 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.

Suppose A promised to pay money to B in exchange for services. B then transferred the right to payment to C. C is then insulated from any consequence arising from a conflict between A and B. Suppose A sues B for non-performance of service. C is insulated from any remedy A receives against B. A is still obligated to pay the original obligation to C.

In the context of negotiable instruments, a Holder in Due Course must have given value in good faith without notice of any previous dishonor in taking the bill, which appears to be complete and regular. Using the previous example, to qualify as someone who has given value in good faith without notice, C should have provided consideration to B in exchange for the transfer of the right to payment. He also must not have been aware of any defect in the right to payment. Then, if C fits the requirements of a HDC, he will take the bill free from any defect in title. [1], such as any dispute between A and B.

The difference between holder and holder in due course are: 1. Meaning: Holder means any person entitled in his own name to the possession of the negotiable instrument and to recover or receive the amount due thereon from the parties thereto. A holder in due course on the other hand, means a holder who takes the instrument in good faith for consideration before it is overdue and without any notice of defect in the title of the person who transferred it to him. 2. Consideration: A person who claims to be a holder in due course must show that he acquired the instrument for consideration. However consideration may not pass from a holder of the instrument. 3. Title: Holder of negotiable instrument does not acquire a better title than that of the person from whom he acquired the instrument. Thus a holder does not acquire a good title if the title of any of the prior parties is defective. But a holder in due course gets a good title even though there was a defect in the title of any prior parties to the instrument. 4. Liability:

But a holder may acquire the instrument even after it has become due for payment. 5. Maturity: A person will be a holder in due course only if he acquires the instrument before the amount mentioned in it become payable. Whereas a holder of the instrument can enforce it against the person who has signed it and also against the transfer-or from whom he obtained it.A holder in due course can sue all prior parties to a negotiable instrument until the instrument is duly satisfied. .

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