Difference between Holder and Holder in Due Course
The term Holder and Holder in Due Course are related to Negotiable Instruments.
Holder is the person who is entitled in his own name to the possession of a negotiable instrument.
- Normally a payee or endorsee is a holder.
- Please note that holder may be or may not be with possession of the Instrument.
- If the payee or endorsee dies, then the legal heir is the holder .
- If there is a forged endorsement then , last endorsee is the holder.
- If it is a bearer cheque, the person in whose name it is made is a holder.
- If it is damaged the payee or last endorsee is the holder.
- If it is stolen, then also payee or last endorsee is holder because a thief cannot become holder.
- The holder has the right to obtain a duplicate of instrument is lost.
- A holder can cross a cheque if it is not already crossed.
Holder in Due Course
Holder in due course means a person who must have the possession of the instrument. This is the basic difference between the Holder and Holder in Due course.
- Holder in Due course must obtain the instrument in Good Faith.
- If the instrument bears not-negotiable crossing , then the NO person can be a holder in due course.
- If the instrument bears A/C payee crossing and restricted endorsement then NO person can be a holder in due course.
- Forgery / theft / deceit do not convey any title.
Video from our Channel