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The Fast Facts to Ordinary Holder Status

Ordinary Holder Status

This most basic definition of a holder does not afford the holder a great many rights or protections. The holder has only the rights to the instrument that the transferor has. The only exception is when rules concerning the holders through a holder in due course apply.

Holders can achieve such status after the exchange, depending upon the exact nature of the negotiation for a given instrument, and the ways in which that negotiation corresponds to the rules for becoming a holder in due course. In almost all situations, the holder should want to fulfill the necessary conditions for being a holder in due course in order to have the protective status afforded by such a position.

NEXT: Understanding Negotiable Instrument Requirements

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