Under the Shelter Principle:
A)The transferee does not acquire all the rights the transferor had in the item.
B)A holder may acquire the rights and privileges of an HDC even if the instrument is not transferred directly from an HDC.
C)A holder may not acquire the rights of an HDC unless the instrument is transferred directly from an HDC.
D)The holder may not acquire the rights of an HDC if the instrument has been previously dishonored.
E)A holder who engages in fraud still may become an HDC if he or she later obtains the instrument from an HDC.

Question

Quizplus · Accepted Answer

A)Under the shelter principle [UCC Section 3-203b)],even a holder who cannot attain holder-in-due-course status can acquire the rights and privileges of an HDC if the item is being transferred from an HDC.The instrument does not need to be transferred directly from an HDC;as long as the holder of an instrument can demonstrate that someone through the line of transfers had obtained the rights of an HDC,then all subsequent holders have these rights.
B)Under the shelter principle [UCC Section 3-203b)],even a holder who cannot attain holder-in-due-course status can acquire the rights and privileges of an HDC if the item is being transferred from an HDC.The instrument does not need to be transferred directly from an HDC;as long as the holder of an instrument can demonstrate that someone through the line of transfers had obtained the rights of an HDC,then all subsequent holders have these rights.
C)Under the shelter principle [UCC Section 3-203b)],even a holder who cannot attain holder-in-due-course status can acquire the rights and privileges of an HDC if the item is being transferred from an HDC.The instrument does not need to be transferred directly from an HDC;as long as the holder of an instrument can demonstrate that someone through the line of transfers had obtained the rights of an HDC,then all subsequent holders have these rights.