N.J. Stat. » Title 12A — COMMERCIAL TRANSACTIONS
New Jersey Statutes

N.J. Stat. § 12A:3-302 (2026)

Holder in due course

✓ current as of May 2026
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a. Subject to subsection c. of this section and subsection d. of 12A:3-106, "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 for value, in good faith, 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, without notice that the instrument contains an unauthorized signature or has been altered, without notice of any claim to the instrument described in 12A:3-306, and without notice that any party has a defense or claim in recoupment described in subsection a. of 12A:3-305.

b. Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection a. of this section, 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 by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding, by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or as the successor in interest to an estate or other organization.

d. If, under paragraph (1) of subsection a. of 12A:3-303, 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 the person entitled to enforce an instrument has only a security interest in the instrument and 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.

Notes of Decisions
Cited in 12 cases (4 in the last 5 years), 2014–2024 · leading case: Globe Motor Co. & the Margolis Law Firm, LLC Vs. ilya Igdalev & Julia Igdalev, 95 A.3d 791 (N.J. Super. Ct. App. Div. 2014).
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Globe Motor Co. & the Margolis Law Firm, LLC Vs. ilya Igdalev & Julia Igdalev, 95 A.3d 791 (N.J. Super. Ct. App. Div. 2014). “N.J.S.A. 12A:3-302(a)(2). Our assessment that defendants are liable under these facts (rather than suggesting plaintiffs are at fault), aligns with this concept.”
Rcd Check Cashing & Fin. Servs., Inc. v. Emlenrich, LLC (N.J. Super. Ct. App. Div. 2024). · cites it 9× “Prong Two of Holder in Due Course UCC Requirements: Good Faith, Requiring Honesty in Fact and Commercial Reasonableness a. Honesty in Fact To secure "holder in due course" status on a check, a check-cashing service must have taken the check in good faith, requiring "honesty in…”
Robert J. Triffin v. Kaiser A. Pathan (N.J. Super. Ct. App. Div. 2024). · cites it 6× “However, in Liccardi Ford, we established that in order to take an instrument in good faith and qualify as a holder in due course under N.J.S.A. 12A:3-302(a), the assignor check cashing company must adhere to "reasonable commercial standards" outlined in the Check Cashers…”
U.S. Bank Nat'l Ass'n, Etc. Vs. Silvana Sotillo(f-4359-14, Monmouth Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2017). · cites it 2× “" N.J.S.A. 12A:3-302(a)(2). There is no claim plaintiff was "engaged in [the] fraud or illegality affecting the instrument.”
Robert J. Triffin Vs. Plaza Gift & Jewelry, LLC (dc-003566-15, Bergen Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2017). · cites it 2× “Plaintiff's knowledge did bar holder in due course status pursuant to N.J.S.A. 12A:3-302(a), which states a holder in due course is the holder of an instrument if: 2 Plaintiff also presents arguments regarding the judgment entered following trial which we need not address in…”
Robert J. Triffin Vs. Theta Holding Co., L.P. Vs. Luis Peña (l-9027-17, Essex Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2021). · cites it 2× “N.J.S.A. 12A:3-302(a)(2). Consequently, plaintiff's argument that Liccardi Ford "unconstitutionally modified .”
U.S. Bank Nat'l Ass'n, Etc. Vs. Karin Polhemus, (f-010769-14, Passaic Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2017). “See also N.J.S.A. 12A:3-302 (defining "holder in due course").”
Wells Fargo Bank, N.A. Vs. N. Exec. Motor Club,llc(l-3722-15, Essex Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2017). “The other requirements of N.J.S.A. 12A:3-302 are not at issue here.”
Robert J. Triffin Vs. Zurich Am. Ins. Co. (dc-004242-16, Camden Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2019). “The record presented, however, shows defendant relies on an argument it did not assert before the motion court. Defendant contends that even if the check was dishonored, plaintiff's claims must be dismissed as a matter of law because neither plaintiff nor the assignor,…”
Pennymac Holdings, LLC v. Joseph Trovato, Etc. (f-4536-14, Monmouth Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2018). “And while we do not dispute defendants' assertion that plaintiff could not establish it was a holder in due course, see N.J.S.A. 12A:3-302, or that their Consumer Fraud Act claims, although brought beyond the six-year statute of limitations, would permit a defense in recoupment,…”
Us Bank Nat'l Ass'n, Etc. Vs. Sandra Lopaz (f-001020-16, Burlington Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2018). “N.J.S.A. 12A:3-302(a). Here, the record supports A-0270-17T2 6 that UMB and US Bank constitute holders in due course.”
Robert J. Triffin v. 3 Gigioni, Inc. (N.J. Super. Ct. App. Div. 2023). “" Plaintiff filed a complaint in which he asserted he had purchased all of Friendly's rights in what he described as "a dishonored check"; Friendly had cashed the check when it had no knowledge of any defenses by any party regarding the check; Friendly thereby became a holder in…”
N.J. Stat. § 12A:3-302(a): 3 cases
Robert J. Triffin Vs. Plaza Gift & Jewelry, LLC (dc-003566-15, Bergen Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2017). “Plaintiff's knowledge did bar holder in due course status pursuant to N.J.S.A. 12A:3-302(a), which states a holder in due course is the holder of an instrument if: 2 Plaintiff also presents arguments regarding the judgment entered following trial which we need not address in…”
Us Bank Nat'l Ass'n, Etc. Vs. Sandra Lopaz (f-001020-16, Burlington Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2018). “N.J.S.A. 12A:3-302(a). Here, the record supports A-0270-17T2 6 that UMB and US Bank constitute holders in due course.”
Robert J. Triffin v. Kaiser A. Pathan (N.J. Super. Ct. App. Div. 2024). “However, in Liccardi Ford, we established that in order to take an instrument in good faith and qualify as a holder in due course under N.J.S.A. 12A:3-302(a), the assignor check cashing company must adhere to "reasonable commercial standards" outlined in the Check Cashers…”
N.J. Stat. § 12A:3-302(a)(2): 4 cases
Globe Motor Co. & the Margolis Law Firm, LLC Vs. ilya Igdalev & Julia Igdalev, 95 A.3d 791 (N.J. Super. Ct. App. Div. 2014). “N.J.S.A. 12A:3-302(a)(2). Our assessment that defendants are liable under these facts (rather than suggesting plaintiffs are at fault), aligns with this concept.”
Robert J. Triffin v. Kaiser A. Pathan (N.J. Super. Ct. App. Div. 2024). “However, in Liccardi Ford, we established that in order to take an instrument in good faith and qualify as a holder in due course under N.J.S.A. 12A:3-302(a), the assignor check cashing company must adhere to "reasonable commercial standards" outlined in the Check Cashers…”
U.S. Bank Nat'l Ass'n, Etc. Vs. Silvana Sotillo(f-4359-14, Monmouth Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2017). “" N.J.S.A. 12A:3-302(a)(2). There is no claim plaintiff was "engaged in [the] fraud or illegality affecting the instrument.”
Robert J. Triffin Vs. Theta Holding Co., L.P. Vs. Luis Peña (l-9027-17, Essex Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2021). “N.J.S.A. 12A:3-302(a)(2). Consequently, plaintiff's argument that Liccardi Ford "unconstitutionally modified .”
N.J. Stat. § 12A:3-302(a)(4): 1 case
Robert J. Triffin Vs. Theta Holding Co., L.P. Vs. Luis Peña (l-9027-17, Essex Cnty. & Statewide) (N.J. Super. Ct. App. Div. 2021). “N.J.S.A. 12A:3-302(a)(2). Consequently, plaintiff's argument that Liccardi Ford "unconstitutionally modified .”
N.J. Stat. § 12A:3-302(d): 1 case
Rcd Check Cashing & Fin. Servs., Inc. v. Emlenrich, LLC (N.J. Super. Ct. App. Div. 2024). “Prong Two of Holder in Due Course UCC Requirements: Good Faith, Requiring Honesty in Fact and Commercial Reasonableness a. Honesty in Fact To secure "holder in due course" status on a check, a check-cashing service must have taken the check in good faith, requiring "honesty in…”
N.J. Stat. § 12A:3-302(g): 1 case
Rcd Check Cashing & Fin. Servs., Inc. v. Emlenrich, LLC (N.J. Super. Ct. App. Div. 2024). “Prong Two of Holder in Due Course UCC Requirements: Good Faith, Requiring Honesty in Fact and Commercial Reasonableness a. Honesty in Fact To secure "holder in due course" status on a check, a check-cashing service must have taken the check in good faith, requiring "honesty in…”
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