Business/commercial law essay question and answers

Abel Rigo received a bill of exchange for value from Boaz Ngao who had obtained the instrument fraudulently. Abel Rigo fearing that the bill might lapse, presented it for payment whereupon it was dishonoured.

State with reasons whether Abel Rigo can claim to be a holder in due course. (4 marks)


• This problem is based on negotiation and dishonour of bills of exchange.
• Abel Rigo is the recipient of the bill of exchange and for value. It is apparent that the bill was obtained fraudulently Boaz Ngao and Abel Rigo appear to have been aware of the fraud hence the fear that the bill might lapse. But on presentation the bill was dishonoured. In view of the foregoing it is evident that Abel Rigo is not a holder in due course.
o Firstly, Abel Rigo is not abona fide transferee since he was aware of the fraud.
o Secondly, he was aware that Boaz Ngao had a defective title.
• In summation, it is arguable that Abel Rigo, cannot claim to be a holder in due course since the circumstances in which he holds the bill are not similar to those prescribed section 29 of the Bills of Exchange Act which defines a holder in due course.

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