Book Opener

for deposit was not a holder because without Nancy’s indorsement,the check was not indorsed to it, to its order, or to bearer.Even when certain defenses are introduced in court, if a holder haspreferred status, the holder may still be able to collect on the instrument.ValueA person must give value for an instrument to qualify as a holder indue course. You give value when you give the consideration that wasagreed upon or when you accept an instrument in payment of a debt. Ifan instrument were negotiated to you as a gift, then you would notqualify as a holder in due course.Good FaithTo be a holder in due course, the holder must take the instrument ingood faith. Good faith means honesty in fact and fair dealing. Itrequires that the taker of a negotiable instrument act honestly. Whethera person took an instrument in good faith is determined at the time oftaking the instrument. If a person acted in good faith at the time, butlater learned of disturbing facts, he or she is still regarded as havingtaken the instrument in good faith.Without NoticeTo be a holder in due course, a holder must not have notice of anyclaim or defense to the instrument, or notice that the instrument is overdueor has been dishonored. A claim is an argument asserted by a personclaiming the instrument. A defense, on the other hand, is typically somethingthat is asserted as a reason not to pay it. A holder has notice of aclaim or defense if the instrument bears visible evidence of forgery oralteration. The same is true if the instrument is so incomplete or irregularthat its legal acceptance is doubtful. Notice of a claim or defense is alsogiven if the holder notices that the obligation of any party is voidable.Win-WinNegotiations areusually aimed at theparties eventuallyreaching an agreement.For example,striking laborers andcompany managementoften enter negotiationsknowing whatthey want, but eventuallyboth sides haveto compromise to getat least part of whatthey originally desired.What kind of negotiationsoccur in yourdaily life?Get InvolvedLearn mediation techniquesto become abetter negotiator.Related topics aresometimes covered inhigh school psychologycourses, and courses onnegotiation are oftenavailable throughcommunity colleges.Example 2. Eva, 17, borrowed $500 from Krista. She gave Kristaa promissory note, promising to pay the money back in 90 days.Krista indorsed the note and sold it at a discount to David, tellingDavid that it came from a minor. David was not a holder in duecourse because he knew that Eva was a minor and could disaffirmthe contract to pay back the money.Holder Through a Holder in Due CourseA holder who receives an instrument from a holder in due courseacquires the rights of the holder in due course, even though he or sheChapter 26: Collecting Negotiable Instruments 561