Sharp Finance Company has furnished Keith with some pre-printed forms for customers to sign to finance repairs on their homes. After the customers sign the notes naming Keith as the payee, he sells them to Sharp Finance. Sometimes Keith is busy and does a poor job on the homes so he can get on to the next job. When customers complain, he says he'll get around to fixing the problems. If the customers don't pay the note, Sharp Finance sues them. Can the customers use the defenses they have against Keith against Sharp? Explain.

Yes, they can use the defenses they have against Keith against Sharp Finance, because it is a consumer credit transaction which falls under the FTC rule "Preservation of Consumers' Claims and Defenses." This rule requires consumer credit contracts to conspicuously state the following provision: "Notice: Any holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of the goods or services obtained pursuant hereto or with the proceeds hereof. Recovery hereunder by the debtor shall not exceed amounts paid by the debtor hereunder."