It is a drearily familiar story: a consumer buys an auto, refrigerator, sofa or whatever, and signs a time-payment contract. The product quickly breaks down or proves otherwise defective, and the dealer refuses to repair or replace it. Understandably, the consumer then tries to withhold payment—only to find that his contract has been sold by the dealer at a discount to a bank, finance company or other lender. The lender proclaims, quite correctly, that as the purchaser of a presumably valid contract—in legal parlance, as a "holder in due course"—he has no responsibility for the merchandise but has a...

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