shelter doctrine
shelter doctrine. Commercial law. The principle that a person to whom a holder in due course has transferred commercial paper, as well as any later transferee, will succeed to the rights of the holder in due course. • As a result, transferees of holders in due course are generally not subject to defenses against the payment of an instrument. This doctrine ensures the free transferability of commercial paper. Its name derives from the idea that the transferees “take shelter” in the rights of the holder in due course. [Cases: Bills and Notes 362. C.J.S. Bills and Notes; Letters of Credit § 189.]
