holder in due course
- An individual holding a check or promissory note without suspicion of it being claimed by another party or previously dishonored and having obtained it in good faith in return for value
- The bank, as a holder in due course, had no knowledge of the disgruntled business partner's claim against the note.
- Despite buying the promissory note in an auction, John was still considered a holder in due course as he had no reason to suspect any claim against it.
- The law provides protection to a holder in due course because the note they hold was acquired without knowing it had been dishonored before.