A breach of a contract for which an instrument was issued will defeat the claim of an ordinary holder for payment on the instrument.

Question

Quizplus · Accepted Answer

If there is a breach of contract for which an instrument was issued (such as a check or promissory note), the ordinary holder of the instrument cannot enforce payment if the breach defeats the purpose of the instrument or if the holder had notice of the breach when acquiring the instrument. This is in accordance with the principle of "real defenses" in contract law.

A Breach of a Contract for Which an Instrument Was