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negotiable instruments.

Ganesh Shetty (Student) (81 Points)

23 January 2019

what is the difference between holder and holder in due course?

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Chirag (Professional) (1979 Points)
Replied 01 February 2019

Holder - Any person who is original owner of something... ( Like in case of Cheque, Payee of Cheque)

Holder In Due Course - Endorsement by Payee to another person, For Some CONSIDERATION and took in a good faith & bona fide transaction...

Let's look at this example.... A purchased goods worth Rs.20000 From B and give him Cheque ,Now B also owed Rs. 20000 to his supplier C,...then he can endorse such cheque to C by writing his name on back and sign...

So, Here A is Drawer
B is Payee/Holder
C is Holder in Due Course

As per the NI act, even the Title of B is defective, C's right will not affect....

In case of Cheque, ( Generally ACCOUNT PAYEE) CHQS losses their further negitiability and Endorsement...