A negotiation to transfer an instrument can be effective even if it is obtained by fraud, duress, or mistake.

Question

A negotiation to transfer an instrument can be effective even if it is  obtained by fraud, duress, or mistake.

Quizplus · Accepted Answer

Under the Uniform Commercial Code (UCC), a negotiation of an instrument may still be considered effective even if the instrument was obtained through fraud, duress, or mistake, as long as the party acquiring the instrument qualifies as a holder in due course. A holder in due course takes the instrument free from claims of the transferor or prior parties, provided they acquired the instrument for value, in good faith, and without notice of any defect at the time of acquisition.

A Negotiation to Transfer an Instrument Can Be Effective Even