Printable Format84-3-202. Negotiation subject to rescission. (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(b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good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.
History: L. 1991, ch. 296, § 21; February 1, 1992.
KANSAS COMMENT, 1996
This section is identical to the 1995 Official Text. It is derived from the former 84-3-207, with minor modifications. Historical case and statutory references may be obtained from the 1965 or 1983 bound Volume 7 of the Kansas Statutes Annotated.
Negotiation by the holder is effective to transfer rights in the instrument, even though other actions might be void, such as lack of capacity.
Recission of a negotiation for the stated reasons will allow the person rescinding negotiation to reclaim the instrument, by process, if necessary, after the negotiation has been rescinded. Recission is not possible against a holder in due course, even if the grounds would represent a real defense good against even a holder in due course, and, under the new provisions, recission cannot be effected against a good faith payor without notice, such as a drawee bank or the maker of a note. The grounds for recission include many of the defenses against payment, but not all of the reasons for recission are defenses to a holder in due course. See 84-3-305(a) and (b).
Revisor's Note:
Former section 84-3-202 was repealed by L. 1991, ch. 296, § 111 and the number reassigned to the current text.