Legal Question in Business Law in New York

Re: Holder in Due Course

There are a limited set of defenses to a Holder in Due Course (HDC). An HDC is a holder who acquires an instrument 1) for value, 2) in good faith, 3) without notice that it is overdue, or that it has been dishonored, and 4) without any questions as to its authenticity. Make sure that you are in fact dealing with an HDC. The only defenses are the so called "real defenses" of: forgery, fraud in the execution, fraudulent alteration, discharge in bankruptcy, minority, illegality, incapacity or duress.

Re: Holder in Due Course

Negotiable instruments flow through the channels of commerce like money. It is not enoguh to be a holder in due course...one must be a bona fide holder in due course.

This remains to be proven.

The law dictionary definition is one holding a check or promissory note, received for value (he/she paid for it) in good faith and with no suspicion that it might be no good, claimed by another, overdue or previously dishonored (a bank had refused to pay since the account was overdrawn). Such a holder is entitled to payment by the maker of the check or note.

Good Luck

RRG

Re: Holder in Due Course

I concur with Bob, but with some additional points. Even the instrument held by a holder in due course can be contested. The holder acquires it subject to any claims or offsets of his original assignor of the instrument. So, for example, if there were offsetting claims against the assignor, not revealed to the assignee-holder, these claims can be raised against the current holder. Likewise, if some statute of limitations has passed, it can be raised as a defense. You have raised basic facts, without sufficient details to provide more than a general reply. There may be more information that could be provided if your factual details were more specific. I suggest you contact some attorney familiar with negotiable instruments and the Uniform Commercial Code which governs most of these documents.