9/17/2023 0 Comments Holder and holder in due course![]() Pursuant to these clauses, parties may specify the precise circumstances under which an assignee of contractual rights takes those rights free from claims and defenses. It contends that parties can generally recreate the effects of the holder in due course doctrine by using "waiver of defense" clauses in ordinary contracts. ![]() This Article questions these conventional policy arguments. The standard explanation for the various requirements for attaining holder in due course status - good faith, value, lacking notice of certain facts - is that these requirements promote fairness and properly limit the incentives that the doctrine creates. The standard justification for immunizing a holder in due course from claims and defenses is that the immunity will encourage beneficial commercial transactions. ![]() The "holder in due course" doctrine, as implemented by Article 3 of the Uniform Commercial Code, says that a party who acquires a negotiable instrument in good faith, for value, and without notice of certain facts, and who also meets some additional requirements, takes the instrument free of competing claims of ownership and most defenses to payment.
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