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This post addresses a holder in due course.

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Bridezilla Wedding Planning issued two checks totaling $150,000 to BabyCakes Bakery for wedding cakes it had purchased. BabyCakes Bakery endorsed the checks over to the law firm of Shark & Shyster as payment for a retainer. BabyCakes Bakery, soon after, collapsed as a business, and Bridezilla Wedding Planning stopped payment on the check because not all of the cakes had been delivered. Shark & Shyster claimed it was a holder in due course and entitled to payment. In the meantime, a local equipment provider claimed its interest in the checks for unpaid bakery equipment. The equipment provider asserted that Shark & Shyster was not a holder in due course because it had not given value for the checks. Is the law firm of Shark & Shyster a holder in due course? Why or why not?

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The solution provides a detailed discussion with legal references for the Bridezilla Wedding Planning case, involving holders in due course.

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The law firm is not a holder in due course. In order to be a holder in due course, six criteria have to be met under the Uniform Commercial Code (UCC). The holder in due course must (1) have taken the instrument for value (not fulfilled in ...

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