A transferor may be able to set aside a negotiation obtained by fraud or duress unless:
A) a minor is involved.
B) the negotiation was part of an illegal transaction.
C) the negotiation was beyond the powers of the corporation.
D) the instrument has been acquired in the meantime by a holder in due course who did not know of the misconduct.

Question

Quizplus · Accepted Answer

The best choice is D. The transferor cannot set aside a negotiation obtained by fraud or duress if the instrument has been acquired in the meantime by a holder in due course who did not know of the misconduct. This is because a holder in due course takes the negotiation free from any claims or defenses that the transferor may have against the original payee. Choices A, B, and C are incorrect because they do not relate to the specific exception outlined in the question.

A Transferor May Be Able to Set Aside a Negotiation