ILCS » Chapter 810 · Act 5

810 ILCS 5/3-302

Holder in due course

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(810 ILCS 5/3-302) (from Ch. 26, par. 3-302)
    Sec. 3-302. Holder in due course.
    (a) Subject to subsection (c) and Section 3-106(d), "holder in due course" means the holder of an instrument if:
        (1) the instrument when issued or negotiated to the
    
holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity, and
        (2) the holder took the instrument (i) for value,
    
(ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment stated in Section 3-305(a).
    (b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
    (c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase at an execution, bankruptcy, or creditor's sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in the ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.
    (d) If, under Section 3-303(a)(1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.
    (e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.
    (f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.
    (g) This Section is subject to any law limiting status as a holder in due course in particular classes of transactions.
(Source: P.A. 87-582; 87-1135.)

    
Notes of Decisions
Cited in 12 cases (2 in the last 5 years), 1999–2026 · leading case: Western & Lake Check Cashers, LLC v. Propane Pete, LLC
Sort: Relevance Newest Treatment
Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct · cites it 3× “¶ 21 Section 3-302(a) of the Code (810 ILCS 5/3-302(a) (West 2020)) defines a holder in due course, providing: “(a) Subject to [defenses not applicable here], ‘holder in due course’ means the holder of an instrument if: (1) the instrument when issued or negotiated to the holder…”
Carter & Grimsley v. Omni Trading, Inc. (1999) illappct “" 810 ILCS 5/3-302(a) (West 1996). Section 3-303(a) of the UCC also states that: (a) "An instrument is issued or transferred for value if: (1) the instrument is issued or transferred for a promise of performance, to the extent that the promise has been performed * * *.”
Heartland Bank and Trust Company v. The Leiter Group (2014) illappct “” 810 ILCS 5/3-302(a)(1)-(2) (West 2012). A person who takes an instrument is subject to a property claim; however, “[a] person having rights of a holder in due course takes free of the claim to the instrument.”
Aurora Bank FSB v. Perry (2015) illappct “See 810 ILCS 5/3-302(a) (West 2010). Aurora as the assignee of the mortgage, pursuant to the Foreclosure Law, attached copies of the mortgage and the assignment to its complaint and motion for summary judgment.”
Aurora Bank FSB v. Perry (2015) illappct “See 810 ILCS 5/3-302(a) (West 2010). Aurora as the assignee of the mortgage, pursuant to the Foreclosure Law, attached copies of the mortgage and the assignment to its complaint and motion for summary judgment.”
Heartland Bank and Trust Co. v. Leiter Group (2014) illappct “” 810 ILCS 5/3-302(a)(1)-(2) (West 2012). A person who takes an instrument is subject to a property claim; however, “[a] person having rights of a holder in due course takes free of the claim to the instrument.”
Travelers Cas. & Sur. Co. of Am. v. Paderta (2018) illinoised “" 810 ILCS 5/3-302(a)(2)(v). The term "notice" as used in Article 3 is defined according to the general definition provided in Article 1.”
West State Street Check Cashing v. United Equitable Group, Ltd. (2026) illappct “” 810 ILCS 5/3-302(a) (West 2024). -4- No. 1-25-0348 In other words, a holder in due course is “someone who takes an instrument that appears to be facially valid, for value, in good faith, without notice that it is overdue, dishonored, or subject to an uncured default with…”
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA v. Wells Fargo Bank (2002) ilnd “” 810 ILCS 5/3-302(a)(l). Travelers alleges that Schwab should have been alerted to the fraud because the check did not contain the “usual and customary magnetic ink containing check-processing information” nor the “usual and customary anti-forgery and anti-copying measures,…”
Aurora Bank FSB v. Perry (2015) illappct “See 810 ILCS 5/3-302(a) (West 2010). Aurora as the assignee of the mortgage, pursuant to the Foreclosure Law, attached copies of the mortgage and the assignment to its complaint and motion for summary judgment.”
Johnson v. Thomas (2003) illappct “810 ILCS 5/3-302(a)(1) (West 2002). In Northwestern National Insurance Co.”
New Randoldph Halsted Currency Exchange, Inc. v. Regent Title Insurance Agency, LLC (2010) illappct “See 810 ILCS 5/3-302 (West 2006); First of America Bank-Northeast Illinois, N.”
— 810 ILCS 5/3-302(a) — 6 cases
Carter & Grimsley v. Omni Trading, Inc. (1999) illappct “" 810 ILCS 5/3-302(a) (West 1996). Section 3-303(a) of the UCC also states that: (a) "An instrument is issued or transferred for value if: (1) the instrument is issued or transferred for a promise of performance, to the extent that the promise has been performed * * *.”
Aurora Bank FSB v. Perry (2015) illappct “See 810 ILCS 5/3-302(a) (West 2010). Aurora as the assignee of the mortgage, pursuant to the Foreclosure Law, attached copies of the mortgage and the assignment to its complaint and motion for summary judgment.”
Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct “¶ 21 Section 3-302(a) of the Code (810 ILCS 5/3-302(a) (West 2020)) defines a holder in due course, providing: “(a) Subject to [defenses not applicable here], ‘holder in due course’ means the holder of an instrument if: (1) the instrument when issued or negotiated to the holder…”
Aurora Bank FSB v. Perry (2015) illappct “See 810 ILCS 5/3-302(a) (West 2010). Aurora as the assignee of the mortgage, pursuant to the Foreclosure Law, attached copies of the mortgage and the assignment to its complaint and motion for summary judgment.”
West State Street Check Cashing v. United Equitable Group, Ltd. (2026) illappct “” 810 ILCS 5/3-302(a) (West 2024). -4- No. 1-25-0348 In other words, a holder in due course is “someone who takes an instrument that appears to be facially valid, for value, in good faith, without notice that it is overdue, dishonored, or subject to an uncured default with…”
— 810 ILCS 5/3-302(a)(1) — 3 cases
Heartland Bank and Trust Company v. The Leiter Group (2014) illappct “” 810 ILCS 5/3-302(a)(1)-(2) (West 2012). A person who takes an instrument is subject to a property claim; however, “[a] person having rights of a holder in due course takes free of the claim to the instrument.”
Heartland Bank and Trust Co. v. Leiter Group (2014) illappct “” 810 ILCS 5/3-302(a)(1)-(2) (West 2012). A person who takes an instrument is subject to a property claim; however, “[a] person having rights of a holder in due course takes free of the claim to the instrument.”
Johnson v. Thomas (2003) illappct “810 ILCS 5/3-302(a)(1) (West 2002). In Northwestern National Insurance Co.”
— 810 ILCS 5/3-302(a)(2)(i) — 1 case
Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct “¶ 21 Section 3-302(a) of the Code (810 ILCS 5/3-302(a) (West 2020)) defines a holder in due course, providing: “(a) Subject to [defenses not applicable here], ‘holder in due course’ means the holder of an instrument if: (1) the instrument when issued or negotiated to the holder…”
— 810 ILCS 5/3-302(a)(2)(v) — 1 case
Travelers Cas. & Sur. Co. of Am. v. Paderta (2018) illinoised “" 810 ILCS 5/3-302(a)(2)(v). The term "notice" as used in Article 3 is defined according to the general definition provided in Article 1.”
— 810 ILCS 5/3-302(a)(l) — 1 case
TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA v. Wells Fargo Bank (2002) ilnd “” 810 ILCS 5/3-302(a)(l). Travelers alleges that Schwab should have been alerted to the fraud because the check did not contain the “usual and customary magnetic ink containing check-processing information” nor the “usual and customary anti-forgery and anti-copying measures,…”
— 810 ILCS 5/3-302(b) — 1 case
Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct “¶ 21 Section 3-302(a) of the Code (810 ILCS 5/3-302(a) (West 2020)) defines a holder in due course, providing: “(a) Subject to [defenses not applicable here], ‘holder in due course’ means the holder of an instrument if: (1) the instrument when issued or negotiated to the holder…”
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