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Holder means any person entitled in his name to the possession of negotiable instrument and due to recover or receive the amount due thereon from the parties thereto.
A holder in due course means a holder who takes the instrument in good faith for consideration before it is overdue and without any notice of defect in the title of the person who transferred it to him.
* Consideration- A person who claims to be a holder in due course must show that he acquired the instrument for consideration. Consideration, however, may not pass from a holder of the instrument.
* Title- holder of negotiable instrument does not acquire a better title than that of the person from whom he acquired the instrument.. As such a holder does not acquire good title if the title of any of the prior parties is defective. But a holder in due course gets a good title even though there was a defect in the title of any prior parties to the instrument.
* Liability- A holder in due course can sue all prior parties to a negotiable instrument until the instrument is duly satisfied, while a holder of the instrument can enforce it against the person who has sighed it and also against the transferor or from whom he obtained it.
* Maturity- A person will be a holder in due course only if he acquires the instrument before the amount mentioned in it become payable. But a holder may acquire the instrument even after it has become due for payment.
"Holder in due course" is a purchaser of a negotiable instrument, not the original owner. Depending on the circumstances, the holder in due course may have different rights that the original party to the underlying contract.
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