It means only that negotiation by an infant, etc. is valid, and one
can become a subsequent Holder in Due Course. Even though the infant
transferor probably will have a real defense to payment, and cannot
be held liable even to a holder in due course, her infancy did not
affect the validity of the negotiation or the ability of a
subsequent holder to be a Holder in Due Course.

      Tom

Thomas L (Tom) Gossman
FCL/HCOB
Western Michigan University
Kalamazoo MI 49008-3811
(O) 616-387-5524 (Fax) 616-387-5710

>>> [log in to unmask] 02/22/00 08:39PM >>>
Hi All:

Say are some of you UCC, Article 3 jocks?  Maybe you can help me
understand
3-202.  It  is this:

Negotiation Subject to Rescission.
(a)  Negotiation is effective even if obtained (i) from an infant,
a
corporation exceeding its powers, or a person without capacity, or
(ii) fraud, duress, or mistake, or in brach of duty or as part of
an illegal
transaction.
(b)  To the extent permitted by law, negotiation may be rescinded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.

I am not clear how negotiation can be effective from, say, an
infant, if
infancy is a universal defense that can be raised even as against a
HDC.

Any body have some clarification here?

Thanks.

Dan.

Daniel M. Warner
Dept. of Acct. (Business Law)
MS 9071
Western Washington University
Bellingham, WA 98225
voice: (360) 650-3390
fax: (360) 650-4844
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