ection.
2.- However, an endorsee for collection is not liable under paragraph 1 of this article if he is without knowledge that the endorsement does not bind the principal:
(a) At the time he pays the principal or advises him of the receipt of payment; or
(b) At the time he receives payment, if this is later,
unless his lack of knowledge is due to his failure to act in good faith or to exercise reasonable care.
3.- Furthermore, a party or the drawee who pays an instrument is not liable under paragraph 1 of this article if, at the time he pays the instrument, he is without knowledge that the endorsement does not bind the principal, unless his lack of knowledge is due to his failure to act in good faith or to exercise reasonable care.
4.- Except as against the agent, the damages recoverable under paragraph 1 of this article may not exceed the amount referred to in article 70 or article 71.
CHAPTER IV - RIGHTS AND LIABILITIES
Section 1
THE RIGHTS OF A HOLDER AND OF A PROTECTED HOLDER
Article 27
1.- The holder of an instrument has all the rights conferred on him by this Convention against the parties to the instrument.
2.- The holder may transfer the instrument in accordance with article 13.
Article 28
1.- A party may set up against a holder who is not a protected holder:
(a) Any defence that may be set up against a protected holder in accordance with paragraph 1 of article 30;
(b) Any defence based on the underlying transaction between himself and the drawer or between himself and his transferee, but only if the holder took the instrument with knowledge of such defence or if he obtained the instrument by fraud or theft or participated at any time in a fraud or theft concerning it;
(c) Any defence arising from the circumstances as a result of which he became a party, but only if the holder took the instrument with knowledge of such defence or if he obtained the instrument by fraud or theft or participated at any time in a fraud or theft concerning it;
(d) Any defence which may be raised against an action in contract between himself and the holder;
(e) Any other defence available under this Convention.
2.- The rights to an instrument of a holder who is not a protected holder are subject to any valid claim to the instrument on the part of any person, but only if he took the instrument with knowledge of such claim or if he obtained the instrument by fraud or theft or participated at any time in a fraud or theft concerning it.
3.- A holder who takes an instrument after the expiration of the time-limit for presentment for payment is subject to any claim to, or defence against liability on, the instrument to which his transferor is subject.
4.- A party may not raise as a defence against a holder who is not a protected holder the fact that a third person has a claim to the instrument unless:
(a) The third person asserted a valid claim to the instrument; or
(b) The holder acquired the instrument by theft or forged the signature of the payee or an endorsee, or participated in the theft or the forgery.
Article 29
"Protected holder" means the holder of an instrument which was complete when he took it or which was incomplete within the meaning of paragraph 1 of article 12 and was completed in accordance with authority given, provided that when he became a holder:
(a) He was without knowledge of a defence against liability on the instrument referred to in paragraphs 1 (a), (b), (c) and (e) of article 28;
(b) He was without knowledge of a valid claim to the instrument of any person;
(c) He was without knowledge of the fact that it had been dishonoured by non-acce
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