Fraud in the inducement is a real defense against holders in due course.

Fraud in the Inducement

A deceptive practice where one party uses fraudulent acts to entice another party into a contract, which can render the contract voidable.

Real Defense

A genuine, substantial defense claim raised in a legal dispute, often based on factual evidence and legal principles.

Holders in Due Course

Parties who have obtained a negotiable instrument in good faith and for value, and thus have certain protections against defenses and claims that could be asserted against the original payee.