Holder in Due Course Case Study Example | Topics and Well Written Essays - 1250 words - 47

Holder in Due Course - Case Study Example In the case study, Talcott sent a check for $5700 on January 15th to Guarino, who presented it to Stuart Any Kind Store for cash. In this case, Guarino was the holder or bearer of the check. Upon confirmation of the validity of the check from the drawer, the check was approved for cashing of $5700 check. Any Kind cashed the Guarino’s check after deducting the service fee of 3 percent or a value equivalent to $171. In order for the holder to qualify as the holder in due course, they must have obtained the instrument in good faith (Mann & Roberts, 2013). In this case, Any Kind Store became the holder in due course of the $5700 check after paying the value of the check to the holder. Any Kind Store was the proprietor of a negotiable instrument which they had taken for value and in good faith. They had given a consideration equivalent to the face value of the check less a 3% discount charges to the holder of the check in accordance with the requirements for the holder in due cours e. When Guarino presented the second check for cashing to Any Kind Stores, the accountant called upon the person who had approved the first check in order to approve for the payment. They called Talcott the drawer to confirm the validity of the check. The drawer approved the $5,700 check for payment after which Any Kind cashed for the holder. In this regard, Any Kind became the holder in due course since they had exercised appropriate care to ensure the check was valid and without defect. However, they did not make an inquiry to about the validity of the $10,000 check of which they had already cashed for Guarino.