Holder in Due Course - Consumer Transactions

The video discusses consumer transactions and the issues surrounding commercial paper created from these transactions. It highlights the role of the Federal Trade Commission (FTC) and state laws in prohibiting the transfer of non-negotiable consumer paper. The video explains that if a paper is non-negotiable, it cannot be held by a holder in due course, only by a transferee. The justification for these regulations is to protect consumers from unfair practices, ensuring they can assert personal defenses against enforcement by a holder in due course. The FTC Rule and state laws aim to prevent consumers from facing demands for payment without regard to the original contract terms.

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