Personal defenses are used to avoid payment to an ordinary holder of a negotiable instrument,but not to an HDC or a holder through an HDC.

Question

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Personal defenses, such as fraud or lack of consideration, can be used to avoid payment to an ordinary holder of a negotiable instrument. However, they cannot be used against a holder in due course (HDC) or a holder through an HDC, as they are protected by the shelter principle.

Personal Defenses Are Used to Avoid Payment to an Ordinary