I am not a UCC jockey, but proper negotiation is a term of art and it
establishes the right to possession of the document (a personal property
concept versus a contract law concept).  So this section addresses the
rights to rescind the fact that it has been negotiated and who is the
"rightful owner" of the document, and it does protect a later HDC from
someone "up the chain" from negating the negotiation itself.  It also
interacts with Section 3-305(c).  I don't know if that helps, perhaps
someone who actually practices in this area can give you an example that
would help provide the picture.  I cannot do that.


At 05:35 AM 2/23/00 -0500, you wrote:
>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(b)  To the extent permitted by law, negotiation may be rescinded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
>[log in to unmask]
>
>
>Attachment Converted: "c:\eudora\attach\Thomas Gossman.vcf"
>