![]() Section 3-303 of the UCC describes what is meant by transferring an instrument “for value.” In a broad sense, it means the holder has given something for it, which sounds like consideration. ![]() ![]() A holder with such a preferred position can then treat the instrument almost as money, free from the worry that someone might show up and prove it defective. What the holder in due course gets is an instrument free of claims or defenses by previous possessors. The holder in due course is really the crux of the concept of commercial paper and the key to its success and importance. A mere holder is simply an assignee, who acquires the assignor’s rights but also his liabilities an ordinary holder must defend against claims and overcome defenses just as his assignor would. If a person to whom an instrument is negotiated becomes nothing more than a holder, the law of commercial paper would not be very significant, nor would a negotiable instrument be a particularly useful commercial device. But a holder’s rights are ordinary, as we noted briefly in Chapter 19 "Nature and Form of Commercial Paper". Importance of the Holder-in-Due-Course ConceptĪ holder is a person in possession of an instrument payable to bearer or to the identified person possessing it.
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