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Bills of Exchange Act, 1964 (Act No. 34 of 1964)

Chapter I

The consideration for a bill

27. Holder in due course


(1) A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following circumstances, namely—
(a) he must have become the holder of it before it was overdue, and if it had previously been dishonoured, without notice thereof; and
(b) he must have taken the bill in good faith and for value, and at the time the bill was negotiated to him, he must have had no notice of any defect in the title of the person who negotiated it.


(2) In particular the title of a person who negotiates a bill is defective within the meaning of this Act if he obtained the bill, or the acceptance thereof, by fraud or other unlawful means, or for an illegal consideration, and is deemed to have been so defective if he negotiates the bill in breach of faith, or under such circumstances as amount to fraud.


(3) A holder, whether for value or not, who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder.