Legal Definitions - bona fide holder for value

A bona fideholder for value is a person who has given something of value in exchange for a negotiable instrument. This means that they have either acquired a security interest in the instrument or accepted the instrument as payment for a debt that was owed to them.

For example, if someone takes out a loan and uses a promissory note as collateral, the lender becomes a bona fide holder for value because they have given money in exchange for the negotiable instrument. Similarly, if a business accepts a check as payment for goods or services that were already provided, they become a bona fide holder for value because they have accepted the check in exchange for an antecedent claim.

The concept of a bona fide holder for value is important in the world of finance because it provides legal protection to those who have acquired negotiable instruments in good faith. If a negotiable instrument is later found to be fraudulent or invalid, a bona fide holder for value may still be able to enforce the instrument and collect on it.