A holder in due course takes a negotiable instrument free of all claims and most defenses that can be asserted against the transferor of the instrument.

Question

Quizplus · Accepted Answer

A holder in due course takes the negotiable instrument free of all claims and most defenses that can be asserted against the transferor of the instrument, as per the Uniform Commercial Code (UCC). However, there are still some limited defenses that can be asserted against a holder in due course, such as fraud in the execution, minority of the obligor, and discharge in bankruptcy.

A Holder in Due Course Takes a Negotiable Instrument Free