Unlike ordinary holders or assignees, holders in due course take free of contract assignment defenses that are good against ordinary holders or assignees.

Question

Quizplus · Accepted Answer

This statement is true. A holder in due course is a special type of holder who takes the negotiable instrument free of certain defenses that may be available to a debtor, including contract assignment defenses. This means that even if there was an issue with the original contract between the debtor and the original creditor, a holder in due course is still entitled to enforce the instrument. However, there are certain requirements that must be met in order for a holder to qualify as a holder in due course.

Unlike Ordinary Holders or Assignees, Holders in Due Course Take