A holder in due course is mainly based on the four requirements that
have been established in the UCC Section – 302. The four
requirements include the holder of the instrument of an authentic
and completely negotiable, in good faith, for value, and without
notice of any defects (Kubasek , 2019). In this case, the requirements
of the holder in due course, have been evaluated. Gerald arranged
for Grace, his mother, in order to pay Kane for the cows. Gerald
made an agreement that he would pay the amount back to his
mother. However, he failed to pay back to his mother. As a result,
Grace canceled the check to Kane. Kane filed a lawsuit for recovering
his money for the sales of his cows and argued that he was the
holder in due course.
The evidence that proves Kane was indeed the holder in due course
is that he fulfilled three elements. He took the check from Grace in
good faith as well as for its value. Also, he did not have knowledge of
any defenses or claims while taking the check. However, the trial
court held that Kane wasn’t the holder in due course. But Judge
Myse remanded as well as reversed the decision. He made use of the
requirements of a holder in due course as the rule of law in order to
support his decision of reversing the decision made by the trial court.
As stated above, the requirements are that the holder must take the
instrument in good faith, for value, and without any defense. In order
to establish the first requirement, the Judge used §403.302 STATS
(2) (Kubasek , 2019). Kane accepted the check as a value for his
cows. Judge Myse added that there was no evidence of bad faith,
thereby justifying the second requirement. The third requirement
was also fulfilled as Grace did not provide any proof that Kane had
knowledge of the defense.
I think there are a few ambiguities present in these rules of law. The
ambiguity is mainly present in the second requirement, that is, good
faith. Good faith is hard to prove. It relies on the honesty of people.
In this case, none of the parties has provided any proof relating to
the lack of good faith.
The ethical value that guided the decision of the judge in the case is
honesty. As there was no evidence found to counter the claims, the
statements are believed to be true.
References
Kubasek , N. (2019, January 14). Dynamic Business Law. McGraw Hill.
Retrieved March 24, 2022, from
https://www.mheducation.com/highered/product/dynamic-
business-law-kubasek-browne/M9781260247893.html
