10 Questions
Which of the following statements accurately defines the shelter principle?
The shelter principle allows any holder, regardless of involvement in fraud, to benefit from HDC rights.
When does a person have notice according to the text?
Upon receiving notification from another about the defect
What is the main purpose of the shelter principle?
To allow any holder deriving through an HDC to acquire HDC rights
What happens if a holder participated in fraud affecting an instrument?
They are not allowed to benefit from the shelter principle.
Under what circumstances is a person considered to have notice?
When they have reason to know about a defect based on facts and circumstances
How does the shelter principle affect holders who have notice of a claim against an instrument?
It restricts them from benefiting under HDC rights.
What is a limitation of the shelter principle?
If a holder participates in fraud affecting an instrument, they are not allowed to benefit.
How can a person acquire HDC rights according to the text?
If they have actual knowledge of the defect
When can a person be considered to have notice based on known facts and circumstances?
When all known facts and circumstances suggest a defect exists
What happens if a holder with notice of a defense against an instrument tries to benefit from the shelter principle?
They face restrictions under the shelter principle.
Explore various indorsement issues related to instruments payable to legal entities and alternative or joint payees in finance. Learn about the rules and requirements for indorsing negotiable instruments.
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