Asked by louis rojas on Jun 07, 2024
Verified
In the context of holder-in-due-course status,explain what a personal defense is,and list the personal defenses.Also,explain what a real defense is,and list the real defenses.
Holder-in-Due-Course Status
Holder-in-due-course status refers to a legal protection granted to the holder of a negotiable instrument, who takes the instrument for value, in good faith, and without notice of any defects or claims against it.
Personal Defense
Legitimate reasons or arguments used by a defendant in a legal proceeding to challenge the enforceability of a demand made against them in a personal rather than real property context.
Real Defense
A liability defense that applies universally to all parties.
- Understand the personal and real defenses in the context of negotiable instruments, and their impact on someone holding in due course.
- Comprehend the notion of fraud in the inducement and fraud in the factum and their impacts on liability.
Verified Answer
SS
Sanket SheladiyaJun 11, 2024
Final Answer :
A holder in due course is generally free from personal defenses.Personal defenses include: a)lack or failure of consideration; b)breach of contract; c)fraud in the inducement in the underlying contract; d)incapacity; e)illegality; f)duress; g)unauthorized completion or material alteration of the instrument; and h)unauthorized acquisition of the instrument.
In contrast to personal defenses,a holder in due course is subject to real defenses.Real defenses include: a)fraud in the essence; b)discharge of the party liable through bankruptcy; c)forgery; d)material alteration of a completed instrument; and e)infancy [in other words,a party is below the legal age of consent].
In contrast to personal defenses,a holder in due course is subject to real defenses.Real defenses include: a)fraud in the essence; b)discharge of the party liable through bankruptcy; c)forgery; d)material alteration of a completed instrument; and e)infancy [in other words,a party is below the legal age of consent].
Learning Objectives
- Understand the personal and real defenses in the context of negotiable instruments, and their impact on someone holding in due course.
- Comprehend the notion of fraud in the inducement and fraud in the factum and their impacts on liability.