Stolen Negotiable Instrument and Holder Status

The video tutorial explains the differences between order paper and bearer paper, focusing on the implications of theft and forgery. For order paper, a valid signature is crucial for negotiation, and any forgery invalidates the document. In contrast, bearer paper does not require a signature, allowing a thief to become a holder. However, if the paper is not transferred in good faith or for value, theft can be used as a defense against payment unless the paper is in the hands of a holder in due course.

What conditions must be met for a subsequent recipient to become a holder in due course?

What defense can a payor assert against a thief presenting a stolen instrument?