A holder who is neither a holder in due course nor a holder through a holder in due course is subject to every defense, just as though the instrument were not negotiable.

Question

Quizplus · Accepted Answer

This is stated in the Uniform Commercial Code, section 3-305. If a holder is not a holder in due course or a successor through a holder in due course, they do not possess the same rights and protections as those who are. They are subject to any defenses or claims against the instrument that existed before it was transferred to them.

A Holder Who Is Neither a Holder in Due Course