The shelter rule applies even if the transferee was a party to fraud or illegality affecting the instrument.

Name: The shelter rule applies even if the transferee was a party to fraud or illegality affecting the instrument.
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Question

Quizplus · Accepted Answer

The shelter rule generally allows a person who acquires a negotiable instrument to obtain the rights of a holder in due course, but it does not apply if the transferee engaged in fraud or illegality affecting the instrument.

The Shelter Rule Applies Even If the Transferee Was a Party