Tuesday, March 20, 2012

BRF 2008 (Solved)

Holder: Holder is the person who is entitled in his own name to the possession of a negotiable instrument. Normally a payee or endorsee is a holder. 
a)      If the payee or endorsee dies, then the legal heir is the holder .
b)      If there is a forged endorsement then , last endorsee is the holder.
c)       If it is a bearer cheque, the person in whose name it is made is a holder.
d)      If it is damaged the payee or last endorsee is the holder.
e)      If it is stolen, then also payee or last endorsee is holder because a thief cannot become holder.
f)       The holder has the right to obtain a duplicate of instrument is lost.
g)      A holder can cross a cheque if it is not already crossed.

Holder in due course: Holder in Due Course is a a holder who
a)      acquires a negotiable instrument for value,
b)      in good faith, and
c)       without notice that the instrument
(i)      is overdue,
(ii)    has been dishonored,
(iii)   is subject to a valid claim or defense by any person,
(iv)  is part of a series against at least one instrument of which exists uncured default,
(v)    contains alterations or unauthorized signatures, or
(vi)  is so irregular or incomplete as to call into question its authenticity.
The difference between holder and holder in due course are:
a.   Meaning: Holder means any person entitled in his own name to the possession of the negotiable instrument and to recover or receive the amount due thereon from the parties thereto. A holder in due course on the other hand, means a holder who takes the instrument in good faith for consideration before it is overdue and without any notice of defect in the title of the person who transferred it to him.
b.   Consideration: A person who claims to be a holder in due course must show that he acquired the instrument for consideration. However consideration may not pass from a holder of the instrument.
c.    Title: Holder of negotiable instrument does not acquire a better title than that of the person from whom he acquired the instrument. Thus a holder does not acquire a good title if the title of any of the prior parties is defective. But a holder in due course gets a good title even though there was a defect in the title of any prior parties to the instrument.
d.   Liability: A holder in due course can sue all prior parties to a negotiable instrument until the instrument is duly satisfied. Whereas a holder of the instrument can enforce it against the person who has signed it and also against the transfer-or from whom he obtained it.
e.     Maturity: A person will be a holder in due course only if he acquires the instrument before the amount mentioned in it become payable. But a holder may acquire the instrument even after it has become due for payment.

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