A Holder in Due Course

Let's go back to negotiable instruments. Every holder of a negotiable instrument is prima facie considered to be a holder in due course and only real defenses are available against them. The following are the characteristics of a holder in due course:

1.) The instrument is taken as complete and regular on its face

2.) He became its holder before the instrument became overdue and without notice that it was previously dishonored (if there was a dishonor)

3.) The instrument was taken in good faith and for value

4.) When it was negotiated to him, he had not notice of an infirmity in the instrument or a defect in the title of the person who negotiated it.

In the absence of these characteristics, he becomes a holder for value and can raise neither real nor personal defenses.