(a) Negotiation is effective even if obtained:
- (1) from an infant, a corporation exceeding its powers, or a person without capacity;
- (2) by fraud, duress, or mistake; or
- (3) 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- (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.