Negotiation Subject to Rescission

  1. Law
  2. Georgia Code
  3. Commercial Code
  4. Negotiable Instruments
  5. Negotiation, Transfer, and Indorsement
  6. Negotiation Subject to Rescission

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  1. Negotiation is effective even if obtained (i) from an infant, a corporation exceeding its powers, or a person without capacity; (ii) by fraud, duress, or mistake; or (iii) in breach of duty or as part of an illegal transaction.
  2. To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.

(Code 1981, §11-3-202, enacted by Ga. L. 1996, p. 1306, § 3.)

RESEARCH REFERENCES

Am. Jur. 2d.

- 11 Am. Jur. 2d, Bills and Notes, §§ 215, 216, 236. 12 Am. Jur. 2d, Bill and Notes, § 610.

C.J.S.

- 10 C.J.S., Bills and Notes, §§ 159, 161.

U.L.A.

- Uniform Commercial Code (U.L.A.) § 3-202.

ALR.

- Invalidity of note as affecting liability of endorser to endorsee or subsequent holder, 16 A.L.R. 1377.

Effect of Negotiable Instruments Act on statute invalidating instrument given for gambling consideration, 37 A.L.R. 698; 46 A.L.R. 959.

Statement made to prospective transferree at time of execution of obligation, negativing defense or offset against obligation, as affecting right to set up defense of fraud, 60 A.L.R. 1180.

Construction and effect of provision of Negotiable Instrument Law as to endorsement or assignment of instrument by infant or corporation, 73 A.L.R. 172.


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