Full question:
Does a holder in due process apply to a gift by contract?
- Category: Contracts
- Date:
- State: New Mexico
Answer:
The holder of commercial paper must meet certain requirements to be a
holder in due course. He must receive the instrument:
• for value
• in good faith
• without notice that the paper is past due or dishonored (e.g.,
payment has been refused by the payor)
• without notice of defenses and adverse claims.
Value must be given in order for the person receiving the
commercial paper to be a holder in due course. For example, a person who
acquires an interest in a promissory note as a gift is not a holder in due
course because he did not "give value."
A person takes an instrument for value:
• by performing the act for which the instrument was given, such as
delivering goods for which a check was sent in payment or performing a
service for which a check was given as payment;
• by acquiring a security interest in the commercial paper (e.g., when
a promissory note is given to a bank as collateral for a loan); or
• by taking the instrument in payment of a debt or as evidence of a
debt.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.
