Restriction of the Holder’s Right
Commonly the holder’s rights are free of influences from the former holder’s status or the relationship between former holders. Even if the instrument has the record of reasons or relationship, it will still be negotiable and the instrument transferee will still enjoy the profits of demurrer cut-off so long as there is no conditionality confinement, which means the instrument transferee will have an opportunity to become the holder in due course according to the Anglo-American law system. Such property of negotiable instrument holder free of demurrers between former parties concerned has made negotiable instruments become a money substitute accepted widely. For such general rules on transfer of negotiable instruments, both Geneva uniform negotiable instrument law system and Anglo-American negotiable instrument law system have provided relevant provisions which, although having different modes, achieve the same effects. However, along which socio-economic development and consumer sovereignty movement, to protect the interests of consumers, Anglo-American system of negotiable instrument laws have set special considerations on the instruments issued by consumers in juridical practices, which are indicated in some latest amended instrument laws, making the Anglo-American negotiable instrument laws have more evident equity colors.
Instruments are commonly used between business bodies. But in recent years, more and more consumers buy merchandises or accept services in consumer credit. The common practice is that consumers issue documents to the seller and the seller transfers the instruments with certain discount to the third party (mainly banks). If the seller fails to fulfill its delivery obligations or its provided goods or services have any defect, the consumer will delay the payment of instruments until the seller delivers the goods or corrects its performance defects. However, such self-protection of consumers can not be realized until the documents are held by the seller. Once the instrument is negotiated to the third party who has all essentials for a holder in due course, the consumer must pay full instrument amounts to the holder because the demurrer of consumer is invalid for a holder in due course. What the consumer can do is to seek compensations from the seller. If the seller is unavailable or flees the responsibility, the consumer will be at a very unfavorable position. If the consumer may also delay its payment to the third party, such as banks, until the sellers deliver the goods or corrects its performance defects, it will be favorable for protection of the consumer's interests. To realize such effect, it is undoubtedly to confine the rules for holder in due course.