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Holder in Due Course - Receive Instrument for Value

What Does it Mean to Give Value or Receive the Commercial Paper for Value?

Written by Jason Gordon

Updated at September 26th, 2021

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Table of Contents

What does it mean to receive an instrument for value?Discussion QuestionPractice QuestionAcademic Research

What does it mean to receive an instrument for value?

The holder must provide some form of value, such as assets, services, or money in exchange for the instrument. Receiving the instrument as a gift is not for value. Value may also mean taking the instrument as payment of an antecedent debt, as consideration for a fully-performed contract, in exchange for another negotiable instrument, or in exchange for an irrevocable obligation. When exchanging the instrument for services or irrevocable obligations, the key characteristic is that the value must have already been provided. That is, there is no future obligation (such as a promise to sell goods or perform services) as part of the transfer for value.

Next Article: Holder in Due Course - Receive Instrument in Good Faith Back to: COMMERCIAL PAPER

Related Topics

  • What is a holder in due course?
  • What are the requirements for a holder to become a holder in due course?
  • Receive an instrument for value?
  • Receive an instrument in good faith?
  • Receive an instrument without notice of a valid defense?
  • How does discharge of the Underlying Obligation affect a holder in due course?

Discussion Question

Why do you think the UCC requires that the holder exchange the instrument for value? Why do you think the value cannot be a future obligation? Is there any argument for allowing future obligations in certain instances?

Practice Question

Hannah issues a promissory note to Ilene. Ilene later enters into a contract to pay Juliet to paint her house. Ilene transfers the promissory note to Juliet as payment for Juliet's obligation to paint her house. Is Juliet a holder in due course?

Academic Research


holder in due course receive instrument for value value

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