If the finance company to which a seller of goods on credit assigns the buyer's promissory note is more than half-owned by the seller, the finance company will likely be held a participating transferee and, as a result, will be denied the status of a holder in due course.

Question

Quizplus · Accepted Answer

According to the doctrine of participating transferee, if a finance company is more than half-owned by the seller, then it is considered to have a direct interest in the transaction and will not be considered a holder in due course. Therefore, the finance company will be denied the status of a holder in due course.

If the Finance Company to Which a Seller of Goods