The Hendersons have purchased their new riding lawnmower on a conditional sale contract.They have just been notified that the contract was assigned to a finance company.The Hendersons may now

Question

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When a contract is assigned to a finance company, the assignee (finance company) steps into the shoes of the assignor (retailer), meaning that the Hendersons can expect to have the same defences against the finance company as they had against the retailer. They are not guaranteed the protection of a holder in due course unless the finance company meets the criteria outlined in the Bills of Exchange Act, and they may not necessarily have to sue for their rights under the contract. They may be subject to personal defences that the seller has against the conditional buyer, but this is not a guarantee. Cut-out clauses are not relevant to this situation.

The Hendersons Have Purchased Their New Riding Lawnmower on a Conditional