Answer:
Definitions
Holder in due course - a holder in due course is a holder that has more legal protections for claiming a payment on an instrument. The holder in due course that is received a check, such as a bank, can claim on payment for the check even if the initial payee and payer are in conflict.
UCC 3-302 - defines the provision to be a holder in due course including, taking an instrument by a) giving value, b) good faith, c) no notice of that the instrument is overdue, dishonored, or other claims on the check.
Discussion
The holder in due course requirement gives three requirements for a holder to be a holder in due course, value, good faith, and no notice. L took the checks for value by giving cash and settling debts from C , furthermore, there's no reason to believe that L should be suspicious of the checks or know the business transaction between C and S the maker of the checks. For example, if L knew the checks should have less than a $5,000 amount then they may not be holder in due course, but since they don't L will be able to recover the amount as it will not be subjected to defense of S as a holder in due course.
Answer:
Case summary:
Mr. WP is an employee of JH Inc. and has a responsibility to liquidate assets of defunct companies. He also had an authority to sign checks on behalf of JH. WP holds a personal investment account with RJ Financial Services and when the stock market crashed, WP started writing checks of JH to maintain his investments in future and also to come over his debts. When RJ asked him about JH's checks, WP assured him that JH is with him and during four months time he invested a total of $1.5 million at RJ Financial Services. When JH's principals came to know about the embezzlement, they sued RJ Financial Services for fraud and embezzlement. Over this RJ argued that it is innocent and an HDC in this case and WP is the real culprit.
Conclusion:
In the above mentioned case, RJ Financial Services is correct because the company was investing money given by its agent and client WP and when questioned he assured RJ that JH Inc. is with him and had information about the investment of the money. Thus this makes RJ innocent as he was just delivering his fiduciary duties for its client. Thus RJ is not liable for any breach of fiduciary duties as charged by JH against him. And the court should also favor RJ by considering its HDC status.
Answer:
Definitions
Holder in due course - a holder in due course is a holder that has more legal protections for claiming a payment on an instrument. The holder in due course that is received a check, such as a bank, can claim on payment for the check even if the initial payee and payer are in conflict.
UCC 3-302 - defines the provision to be a holder in due course including, taking an instrument by a) giving value, b) good faith, c) no notice of that the instrument is overdue, dishonored, or other claims on the check.
Discussion
The holder in due course requirement gives three requirements for a holder to be a holder in due course, value, good faith, and no notice. Assuming that P took checks for value, then the only issues that remains is whether P had taken in good faith, and had no notice that D 's check are overdue, dishonored, or other disputes on it. It wouldn't matter if the check was postdated or P was aware of D 's financial situation. However, P should not take checks that they deem suspicious as that would be in bad faith and if P is a regular business partner or employee of D , P might be prevented from being a holder in due course due to having too close connection with D , the close connection doctrine.