Since bona fide means "good faith" in Latin, bona fide law means a holder or purchaser has taken an item without knowing a superior claim or lien was made by another person. Being genuine also relates to bona fide law. There is nothing fraudulent going on with bona fide law. Bona fide maintains a level of innocence with a trustworthy attitude that is without deception.

A "bona fide holder" of a bill of exchange:

  • Is commonplace
  • Is not overdue
  • Has good faith
  • Has no defect in the title

A bona fide occupational qualification (BFOQ) is exempted from Title VII discrimination laws, which gives permission to an organization to hire and give work to people who are qualified based on sex and nationality. A claim of age discrimination can be made against an employee when the employer proves that they were following rules of a bona fide seniority system with decent goals.

An example of bona fide merchants in terms of a state statute is as follows:

  • "No license for a going out of business sale or a distress merchandise sale shall be issued except to a bona fide licensed merchant of the State of Alabama, and no such license shall be granted to an applicant who sets up an establishment or who acquires an interest in an establishment solely or principally for the purpose of conducting a going out of business sale or distress merchandise sale."

All people must act in good faith when making transactions with a contract in which all people have no action of bona fide. When a contract has been made in good faith, dishonest acts won't make it any less valid. Dishonest acts will make it look like certain motives were made before the contract was created, where the person might have to prove it was made in good faith. These actions are called (actiones) bonae fidei by civil law, where a judge has no restriction of power (liberior potestas) to guess how much each person must do for each other.

An example of the above is:

  • "The power to amend the Articles of Incorporation must be exercised bona fide for the benefit of the company," or you could say "she failed to establish the bona fides of her marriage" and in that case it means good faith and what they're getting at is that you should get married in good faith because you want to marry that person, not get married just because you want to get a green card."

Bona fide, in modern English terms, means the same as proving a person's identity. Someone could say "he was quick to defend his white collar bona fides" which means he went against someone in court over white collar criminal actions. He is qualified to prosecute for economic or white collar crimes.

Bona fide is used in many phrases like a bona fide purchaser, who is an innocent party who purchased something without knowledge of a third party involved. A bona fide holder can be someone who takes a financial tool in good faith and uses it without knowledge of other claims on it. Pertaining to tax law, bona fide business purpose which translates to taking part in a transaction that had to do with the business in the first place and done honestly. A bona fide residence is where a person lives.

When Does a Dispute Become Bona Fide?

Section 303 of the Bankruptcy Code is becoming more important as more creditors are filing written requests against borrowers who are being uncooperative. According to section 303(b)(1), an involuntary case that is not voluntary can be started “by three or more entities, each of which is a holder of a claim . . . that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount.” The Bankruptcy Code does not present in detail how a debt is “the subject of a bona fide dispute.” There was a decision made by the Bankruptcy Court for the Eastern District of Tennessee with a detailed definition.

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