Asked by Mariah Trevino on Jul 04, 2024
Verified
With a few exceptions, anyone who can ultimately trace his or her title to an instrument back to an HDC can acquire the rights and privileges of an HDC.
HDC Rights
Rights held by a Holder in Due Course, a party that has acquired a negotiable instrument in good faith and for value, thereby having certain protections.
Title
Legal ownership of property or assets.
Few Exceptions
A small number of instances or cases that do not follow the general rule.
- Understand the concepts related to Holder in Due Course (HDC) status and the protections it offers.
- Identify the importance of the shelter principle in HDC transactions.
Verified Answer
AC
Aryahna ConverseJul 08, 2024
Final Answer :
True
Explanation :
An HDC, or Holder in Due Course, is a party who has acquired a negotiable instrument in good faith and for value, and thus is protected in certain ways under the Uniform Commercial Code (UCC). If a subsequent holder can trace their title back to an HDC, they can also acquire the rights and privileges of an HDC, provided they meet the necessary qualifications (good faith, value, and without notice of any defect). This principle allows for the free and trusted exchange of negotiable instruments in commerce.
Learning Objectives
- Understand the concepts related to Holder in Due Course (HDC) status and the protections it offers.
- Identify the importance of the shelter principle in HDC transactions.