This article has multiple issues. Please help
improve it or discuss these issues on the
talk page. (
Learn how and when to remove these template messages)
|
In commercial law, a holder in due course (HDC) is someone who takes a negotiable instrument in a value-for-value exchange without reason to doubt that the instrument will be paid. If the instrument is later found not to be payable as written, a holder in due course can enforce payment by the person who originated it and all previous holders, regardless of any competing claims those parties may have against each other. This right shields a holder in due course from the risk of taking instruments without full knowledge of their history.
This section may be too technical for most readers to understand.(December 2022) |
The rights of a holder in due course of a negotiable instrument are qualitatively, as matters of law, superior to those provided by ordinary species of contracts:
The rule can be considered inequitable to consumers. As a response to this, the U.S. Federal Trade Commission promulgated Rule 433, formally known as the "Trade Regulation Rule Concerning Preservation of Consumers' Claims and Defenses", which "effectively abolished the [holder in due course] doctrine in consumer credit transactions". [3] In 2012, the FTC reaffirmed the regulation. [4]