Holder and Holder in Due Course


After carefully reading this chapter, you will be able:

  • Differentiate between a holder and holder in due course.
  • Explain the privileges available to the holder in due course.
  • Enumerate the rights of a holder in due course.

A holder has been defined as, ‘any person entitled in his own name, to the possession thereof and to receive or recover the amount due thereon from the parties there to.’ (Sec. 8)

In simple words, only the person legally entitled to receive the money due on the instrument is the holder. Therefore, if a person has obtained possession of an instrument by theft or forgery, he cannot be a holder. If a servant or clerk keeps such an instrument of his employer for safe custody, ...

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