What Is the Purpose of the Federal Trade Commission Rule

question 53

Multiple Choice

What is the purpose of the Federal Trade Commission rule that eliminates the benefits of holder in due course status in certain consumer credit transactions?

• A) to protect merchants of goods from consumers improperly refusing to pay
• B) to protect subsequent holders of consumer credit contracts from consumers improperly refusing to pay
• C) to protect consumers from having to pay a holder in due course of a promissory note if the goods that gave rise to the note are defective
• D) to encourage merchants to extend credit to consumers

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Definitions:

Chain of Distribution

The sequence of entities through which goods or services pass until they reach the end consumer, including manufacturers, wholesalers, and retailers.

Component Parts

Component parts are individual pieces or elements that make up a product, which can be replaced or repaired independently of the rest of the product.

Defective Parts

Components or elements of a product that are faulty or not functioning as intended.

Statute of Repose

A law that sets an absolute deadline for initiating legal action, regardless of when an injury or damage is discovered.