Difference between Holder and Holder in Due Course
Holder:
Holder is the person who is entitled in his own name to the possession of a negotiable instrument.
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Normally a payee or endorsee is a holder.
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Please note that holder may be or may not be with possession of the Instrument.
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If the payee or endorsee dies, then the legal heir is the holder .
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If there is a forged endorsement then , last endorsee is the holder.
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If it is a bearer chequeA cheque is also a Bill of ExchangeRegulated market place where capital market products are bought and sold through intermediaries. There are 3 parties in the bill of Exchange. BEO is a written negotiable Instrument which contains an unconditional order which is Signed by ..... A cheque is a bill of exchange in which one party (Drawee) is a Bank. So a Drawer ....., the person in whose name it is made is a holder.
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If it is damaged the payee or last endorsee is the holder.
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If it is stolen, then also payee or last endorsee is holder because a thief cannot become holder.
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The holder has the right to obtain a duplicate of instrument is lost.
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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.
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Holder in Due course must obtain the instrument in Good Faith.
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If the instrument bears not-negotiable crossing , then the NO person can be a holder in due course.
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If the instrument bears A/C payee crossing and restricted endorsement then NO person can be a holder in due course.
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Forgery / theft / deceit do not convey any title.
