Question

The best description of a holder in due course is__________

Answer 1

A holder in due course is an individual or entity that has legally obtained a negotiable instrument under specific conditions such as value, good faith, and lack of knowledge of any defects, thereby enjoying certain rights which further the principles of justice in acquisition and transfer.

Step-by-step explanation:

The best description of a holder in due course is an individual or entity that has legally obtained a negotiable instrument, such as a check or promissory note, and has certain rights to it free from many defenses or claims that could be asserted by the original parties. This person or entity must have taken the instrument under the following conditions: it must be for value, in good faith, and without notice of any dishonor or claim. The holder in due course has a right to payment and is protected in ways that ordinary holders are not, by the Principals of Justice in acquisition and transfer. Tying in with the principles mentioned:

1. A person who acquires a holding in accordance with the Principle of Justice in acquisition is entitled to that holding.
2. A person who acquires a holding in accordance with the Principle of Justice in transfer, from someone else entitled to the holding, is entitled to the holding.
3. No one is entitled to a holding except by (repeated) applications of (1) and (2).