Hedge Fund Glossary

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Holder in Due Course

a party who purchases a Negotiable Instrument in good faith for value without notice that the instrument is defective or has been dishonored or claimed against by others. Generally, when a party sells a Negotiable Instrument with a non-apparent defect to a Holder in Due Course, that Holder in Due Course takes good title to the Negotiable Instrument despite the competing claims of another person, subject to certain defenses such as fraud or duress (known as “real defenses”).

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