Fraud in factum:
A) occurs when a person is persuaded to execute an instrument because of fraudulent statements.
B) occurs when a person signs an instrument as a result of being fraudulently deceived regarding essential terms.
C) is not a universal defense.
D) cannot be raised against a holder in due course.

Question

Quizplus · Accepted Answer

Fraud in factum occurs when a person signs an instrument as a result of being fraudulently deceived regarding essential terms. It is not the same as fraud in the inducement (option A), which occurs when a person is induced to sign an instrument because of fraudulent statements. Fraud in factum can be used as a defense in contract law, but it is not a universal defense (option C). It can also be raised against a holder in due course (option D).

Fraud in Factum