There are many California requirements for an investor to be a holder in due course. A holder of an instrument is entitled to enforce the instrument. However, a “holder in due course” has greater rights under the Uniform Commercial Code (UCC) and the California Commercial Code (COM) than a holder who is not a holder in due course. Specifically, a holder in due course takes an instrument free from many of the defenses to repayment that might have been asserted against the original obligee or against another assignee or holder not in due course. An experienced San Jose business law firm can help business owners and investors understand their rights and requirements in order to be a holder in due course.
There are specific requirements that must be met for an investor to qualify as a holder in due course, including that:
- The investor takes the instrument for value;