Kane was a holder in due course because of three key elements. The
first was that Kane took the check as payment for the debt. The
second was that he took it in good faith. The third is that he had no
knowledge that the check would have otherwise been cancelled
should Gerald fail to honor the payment to grace.
The problem with good faith is that the concept itself can be pretty
ambiguous, fortunately for this particular case there was no evidence
from either side of an otherwise good faith transaction. The problem
with accepting a check in what is defined as good faith is that the
while the check itself in not a guarantee of payment, one still has to
accept it under the understanding that it will be honored and backed
with funds once cashed meaning the person receiving the check
would have to suppress any visible or verbal sign of doubt or
reluctance that the check will not be honored by the other party
otherwise the transaction would not be deemed in good faith. In a
way it feels like Kane was deemed a holder in due course due to
appearing ignorant to the possibility that Grace would cancel the
check because she was relying on Gerald's successful transaction.
Kubasek, N., Browne, M., Herron, D., Dhooge, L., Herron, D.,
Barkacs, L. (2020).
