The Holder in Due Course rule creates a warranty claim or defense where the product is sold "as is."

Question

Quizplus · Accepted Answer

The Holder in Due Course rule does not create a warranty claim or defense. It only applies to negotiable instruments, such as checks or promissory notes, and protects a holder who acquires the instrument in good faith and for value, even if the transferor may have had defenses or claims against the original obligor. The "as is" sale of a product does not involve a negotiable instrument, and therefore the Holder in Due Course rule is not relevant.

The Holder in Due Course Rule Creates a Warranty Claim