Under the shelter rule,the transferee gets the rights of the transferor who is a holder in due course even if the transfer is not for value.

Question

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Under the shelter rule, a transferee who receives a negotiable instrument from a transferor who is a holder in due course (HDC) will also be considered an HDC even if they did not give value for the transfer. This rule provides protection to innocent parties who may have unknowingly accepted a stolen or forged instrument from an HDC.

Under the Shelter Rule,the Transferee Gets the Rights of the Transferor