The "shoe rule" does not apply when _____
A) there is a sale of a negotiable instrument to a holder in due course.
B) doing so would maintain the obligation of the obligor.
C) statute or public policy forbids the assignment.
D) the contract itself precludes assignment.
E) the assignor must make known his intention to transfer the rights to the third person.

Question

Quizplus · Accepted Answer

The shoe rule, which requires delivery of the subject matter of the contract or payment of the purchase price, does not apply when there is a sale of a negotiable instrument to a holder in due course. This is because the holder in due course takes the instrument free from any claims or defenses that the obligor may have had against the assignor.

The "Shoe Rule" Does Not Apply When _____