When a party takes a negotiable document as a good faith purchaser,it generally acquires even greater rights in the document than the one from whom it had been negotiated.

Question

Quizplus · Accepted Answer

This is known as the principle of "holder in due course" and under this principle, the party taking the negotiable document as a good faith purchaser acquires the rights to the document free from any defects or claims of ownership by previous holders. This means that the purchaser has greater rights than the one who negotiated the document to them.

When a Party Takes a Negotiable Document as a Good