Any person who can trace his title to an instrument back to a holder in due course receives rights similar to a holder in due course even if he cannot meet the requirements himself. This is known as the _____.
A) shelter rule
B) holder in due course rule
C) Federal Trade Commission rule
D) irregular paper law

Question

Quizplus · Accepted Answer

The transferee of an instrument-whether or not the transfer is a negotiation-obtains those rights that the transferor had, including (1) the transferor's right to enforce the instrument and (2) any right as a holder in due course. This means that any person who can trace his title to an instrument back to a holder in due course receives rights similar to a holder in due course even if he cannot meet the requirements himself. This is known as the shelter rule in Article 3 of the Uniform Commercial Code.

Any Person Who Can Trace His Title to an Instrument