The shelter principle promotes the marketability and free transferability of negotiable instruments by
A)limiting the rights and privileges of an HDC.
B)extending the benefits of HDC status.
C)permitting any holder to attain HDC status by reacquiring an instrument.
D)sheltering the principal amount of an instrument without recourse.

Question

Quizplus · Accepted Answer

The shelter principle extends the benefits of Holder in Due Course (HDC) status to subsequent holders, allowing them to inherit the rights and privileges of an HDC, even if they themselves would not qualify as an HDC under normal circumstances. This promotes the free transferability and marketability of negotiable instruments by ensuring that the rights can be passed along through subsequent transfers.

The Shelter Principle Promotes the Marketability and Free Transferability of Negotiable