Which of the following is a real defense to a holder in due course?

• A. Fraud in factum
• B. Lack of consideration
• C. Forgery by the holder
• D. Lack of capacity

Answer: (A)

Fraud in factum is a real defense because it attacks the validity of the instrument itself. When someone signs a document without understanding that it is a negotiable instrument (or signs something they didn’t know the nature of), the instrument can be void or voidable in a way that the holder in due course cannot cure. A true holder in due course takes the instrument free from many defenses, but not from real defenses that go to the instrument’s validity.

Lack of consideration is a contractual or personal defense, not a real defense against a holder in due course, so it doesn’t defeat an HDC. Lack of capacity and forgery by the holder are not treated as the type of real defense relied on to defeat enforcement by an HDC in this context.