Limit Holder in Due Course Status - FTC Rule

The video tutorial discusses whether a commercial instrument's maker can limit a transferee's ability to become a holder in due course. It explains that holder in due course status provides certain defenses against payors. The Federal Trade Commission (FTC) rule allows a note maker to include a legend that subjects the holder to any defenses, thus limiting holder in due course status. This limitation can affect the instrument's value and liquidity, as it reduces the negotiability and increases the risk of non-payment.

What is the significance of holder in due course status in relation to a payor?

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How can the maker of a note limit the ability of a subsequent transferee to become a holder in due course?

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What does the Federal Trade Commission rule allow the maker of a note to include on the instrument?

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What are the implications of negotiability in relation to the rights of an individual holding an instrument?

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In what ways can limiting the ability to become a holder in due course affect the value of an instrument?

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