Under the Shelter Principle

question 4

Multiple Choice

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.

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Definitions:

Eagleson Company

A hypothetical or unspecified business entity used for illustrative purposes.

Prevention Cost

Expenses incurred to prevent defects in products or services before they occur.

Quality Cost Report

A report that details the costs associated with ensuring product or service quality, including prevention, appraisal, and failure costs.

Prevention Cost

Costs incurred to avoid producing defective products, including expenses related to quality training, equipment maintenance, and process improvement.