When an instrument is transferred, an ordinary holder obtains only those rights that the transferor had in the instrument but is free of most of the defenses and claims that could be asserted against the transferor.

Question

Quizplus · Accepted Answer

An ordinary holder obtains the same rights as the transferor had, but a holder in due course (not an ordinary holder) is the one who obtains the instrument free of most defenses and claims that could be asserted against the transferor.

When an Instrument Is Transferred, an Ordinary Holder Obtains Only