Rights of a Holder in Due Course

Question 1

A holder in due course

Answer 1

take an instrument free of personal defense BUT is subject to real defenses

Question 2

What are examples of personal defenses

Answer 2

Fraud
Breach (non-performance) of contract
Breach of Warranty
Unauthorized completion of incomplete instrument
Lack of Consideration

Question 3

What are examples of real defenses

Answer 3

Bankruptcy
Forgery
Material Alterations (change in date/amount/interest)
Extreme Durress
A minor that can disaffirm a contract
Infancy (unless exchanged for necessaries)

Question 4

If you knew of a lie when you purchased the note

Answer 4

you are not a HDC and can’t improve status