If the holder meets the above requirement at the moment when she takes possession, she is a HDC. HDC status is determined at the time that the holder receives the instrument. ![]() This is generally deemed to be actual notice, but constructive notice from the situation could disqualify the individual as well. ![]() Unaware of Defenses - The holder cannot have notice that there is a valid defense to enforcement of the instrument. It is easy to imagine any number of schemes in which a transferor would try to manipulate the law by transferring an instrument to a holder with a greater right to repayment. This means that the holder cannot have the intent to defraud anyone in receiving the instrument. ![]() Good Faith - The holder must receive the instrument in good faith. The transfer cannot be a gift or inheritance. This means that the holder must provide money or goods for the instrument. Value - The holder must take the instrument for value. To qualify as a HDC, the holder of the commercial paper must meet the following requirements: Update Table of Contents What are the requirements for a holder of an instrument to become a holder in due course? Discussion Question Practice Question Academic Research What are the requirements for holder in due course?
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