Litigation expense and Holder in Due Course judgments can cripple a company financially and should be feared and avoided, especially in light of some Appellate Court rulings. 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. entirely blank is vulnerable to a Holder in Due Course lawsuit. Other parties with a claim to ownership will have a cause of action against the party who sold the negotiable instrument to the HDC. In commercial law, a holder in due course is someone who takes a negotiable instrument in a value-for-value exchange without reason to doubt its legitimacy. 322).Īn 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.ĭepending 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. 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 dishonour (Black’s Law Dictionary 2nd Pocket ed.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |