- (a) 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.
- (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good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.
HISTORY: 1962 Code Section 10.3-202; 1966 (54) 2716; 2008 Act No. 204, Section 2, eff July 1, 2008. Definitional Cross References: "Good Faith" Section 36-3-103(a)(6) "Holder in due course" Section 36-3-302(a) "Instrument" Section 36-3-104(b) "Knowledge" Section 36-1-201(25) [see now Section 36-1-202] "Negotiation" Section 36-3-201(a) "Person" Section 36-1-201(30)