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EXAMPLEM is induced through (simple) fraud committed by P to issuea promissory note in favor of P. Here, P is a party to thefraud. P indorsed the note to A. A has notice of the fraud butdid not take part in it. By A, the note is indorsed to B, aholder in due course. B, in turn, indorses the note to C whoknows how the note was obtained but without being a partyto the fraud.
(1) In this case, even if C is not a holder in due course, he has all the rights of such holder in respectof P, and A having derived his title from B, a holder in due course, and the defenses of fraud cannot beset up against him. In effect, C is a holder in due course relative to M, P, and A.(2) If instead of indorsing the note to C, B indorses it to P, payee, the latter cannot recover on theinstrument because he is party to the fraud. P is remitted to his original position when he firstacquired the note from M.(3) If the note is indorsed by C to D, who has also notice of the defect but was not a party to thefraud, D cannot recover from M because D did not acquire his title from a holder in due course.(4) Assuming that C is a holder in due course and A reacquires from him the note, the latter is notgiven the former’s rights although he was not a party to the fraud. A is remitted to his original positionwhich he occupied when he first acquired the note from The act of A in negotiating the note to aholder in due course in order to cut off M's defense upon his (A's)reacquisition of the instrument may be considered fraud under Section 55.(5) If B who takes the note from A as a holder in due course and negotiates it to C who is not aholder in due course, reacquires it from C, B will hold the note as a holder in due course. He isremitted to his former position.
Page 1 and 2: SECTION 57 -63
Page 3 and 4: RIGHTS OF A HOLDER IN DUE COURSE.(1
Page 5 and 6: SECTION 58• When subject to origi
Page 7 and 8: REAL DEFENSES• Real defenses are
Page 9 and 10: PERSONAL DEFENSES• Personal defen
Page 11 and 12: (i) Negotiation of breach of faith
Page 13 and 14: DEFENSES AVAILABLE AGAINST A HOLDER
Page 15 and 16: FRAUD IN FACTUM• Fraud in the exe
Page 17 and 18: RIGHTS OF HOLDER NOT IN DUECOURSE.(
Page 19: RIGHTS OF PURCHASER FROM A HOLDERIN
Page 23 and 24: WHEN HOLDER PRESUMED A HOLDERIN DUE
Page 25 and 26: SECTION 60•Liability of maker. -
Page 27 and 28: PRIMARY PARTY AND SECONDARY PARTYDI
Page 29 and 30: EXAMPLEM issues a promissory note t
Page 31 and 32: LIABILITY OF DRAWER(1) Liability co
Page 33 and 34: DRAWER DISTINGUISHED FROMMAKER(1) T
Page 35 and 36: LIABILITY OF ACCEPTOR• Liability
Page 37 and 38: EXAMPLEIf R draws on W a bill for P
Page 39 and 40: (1) Tenor of acceptance. - Accordin
Page 41 and 42: PAYMENT WITHOUT ACCEPTANCE• For p
Page 43 and 44: Issue: Was there an implied accepta
Page 45 and 46: WHEN A PERSON LIABLE AS GUARANTOROR

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