To acquire the preferential rights of a holder in due course, a person either must meet the requirements of the UCC or must inherit the rights under the shelter rule.

Question

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Under the Uniform Commercial Code (UCC), to become a holder in due course, a person must meet specific requirements such as taking the instrument for value, in good faith, and without notice of certain defects. However, a person can also acquire these rights through the shelter rule, which allows someone who does not qualify as a holder in due course to gain those rights if they acquire the instrument from someone who is a holder in due course.

To Acquire the Preferential Rights of a Holder in Due