In terms of the requirements for becoming a holder in due course,notice of a defect is given when the holder has actual knowledge of the defect,has received a notice or notification of the defect,or has reason to know from the facts and circumstances that the defect exists.

Question

Quizplus · Accepted Answer

This is the correct definition of "notice of a defect" for a holder in due course. Awareness or reason to suspect a defect in the instrument is necessary for the holder to be considered "in due course."

In Terms of the Requirements for Becoming a Holder in Due