Bills of Exchange Act 1909

A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions, namely:

That he or she became the holder of it before it was overdue, and without notice that it had been previously dishonoured, if such was the fact; and

That he or she took the bill in good faith and for value, and that at the time the bill was negotiated to him or her he or she had no notice of any defect in the title of the person who negotiated it.

In particular the title of a person who negotiates a bill is defective within the meaning of this Act when he or she obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he or she negotiates it in breach of faith, or under such circumstances as amount to a fraud.

A holder (whether for value or not) who derives his or her title to a bill through a holder in due course, and who is not himself or herself 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.