Sec. 42a-3-202. Negotiation subject to rescission. - Connecticut Statutes

      Sec. 42a-3-202. Negotiation subject to rescission. (a) Negotiation is effective even if obtained (i) from an infant, a corporation exceeding its powers, or a person without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part of an illegal transaction.

      (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.

      (1959, P.A. 133, S. 3-202; P.A. 91-304, S. 21.)

      History: P.A. 91-304 entirely replaced former provisions re negotiation and endorsement with provisions re negotiation subject to rescission, a restatement of Sec. 42a-3-207, revised to 1991.

      See Sec. 42a-3-201(a), 42a-3-203(d) and 42a-3-204(a) for successor provisions to Sec. 42a-3-202, revised to 1991, re negotiation and endorsement.

      Annotations to former statute (1958 Rev., S. 39-31):

      There must be delivery as well as endorsement to transfer title. 17 C. 520; 97 C. 318; Id., 483. Continuing guaranty made to avoid necessity of endorsing each of long series of notes. 67 C. 155. Effect of two endorsements by same person, one "without recourse". 71 C. 418. Delivery may be conditional. Id., 177; Id., 742; 76 C. 126; 79 C. 626. "Transfer" defined. 81 C. 677. Delivery in escrow. Id., 670. Fact that check delivered was to be replaced by another held no defense. 83 C. 526. Meaning of "negotiation". 85 C. 154. Cited. 118 C. 45.

      Cited. 11 CS 228.

      One may acquire title of order paper by assignment but need endorsement to become a holder in due course. 6 Conn. Cir. Ct. 545.

      Annotation to present section:

      Subsec. (a):

      Subdiv. (i) cited. 35 CA 326.