When a party signs a negotiable instrument without knowing that it is,in fact,a negotiable instrument,the party can claim ________.
A)negligence
B)recklessness
C)malice
D)fraud in the factum
E)fraud in the factum and fraud in the inducement

Question

Quizplus · Accepted Answer

When a party signs a negotiable instrument without knowing that it is,in fact,a negotiable instrument,the party can claim fraud in the factum (also called fraud in the execution and fraud in the essence)as a defense.For example,suppose Michael Jordan believes he is signing an autograph for a fan,but he is actually signing a promissory note.Because he did not intend to sign a negotiable instrument,he will not be held liable for the instrument.

When a Party Signs a Negotiable Instrument Without Knowing That