Uniform Consumer Credit Code; Negotiable Instruments

An assignment is an agreement between the assignor and assignee which “merely transfers the assignor’s contract rights, leaving them in full force and effect as to the party charged” and the assignee steps into the shoes of the assignor.[i]
Generally, the assignment of a chose in action leaves the assignee subject to the obligor’s defenses.  However, this is not the case with a transfer of a negotiable instrument to a holder in due course.  Such a transfer leaves the holder free of most of the obligor’s defenses.

Also, under the Uniform Consumer Credit Code, an assignee of the rights of a seller of consumer goods is subject to all the claims and defenses that the consumer would have against the seller.  This is true even when the consumer’s debt is evidenced by a negotiable instrument, of which the assignee is a holder in due course.

[i] State Bank of India v. Walter E. Heller & Co., 655 F. Supp. 326, 331 (S.D.N.Y. 1987)

Inside Uniform Consumer Credit Code; Negotiable Instruments