Defenses Flashcards
What are the defenses against an HDC?
Real Defenses only - not Personal.
(1) INFANCY - always a real defense, but subject to the state K rules of this defense
(2) - (4) DURESS , mental INCAPACITY, ILLEGALITY of transaction
- real defenses only where they can render the contract void (if only voidable - then personal)
- duress - must be extreme (immediate threat of force or violence)
- incapacity - found mentally incompetent by state
- illegality - statute declares instrument executed in connection with illegal conduct is void
(5) FRAUD IN THE FACTUM - defense valid where person was deceived into signing instrument and thouht it was something else –
- not a valid defense where reasonable inquiry would have revealed nature of instrument
(6) DISCHARGE IN BANKRUPTCY or WHERE HDC HAS NOTICE
(7) FORGERY -maker/drawer’s forged signature can’t bind the person whose name is used
(8) MATERIAL ALTERATION - material if it changes terms b/w any two parties in anyway – PARTIAL defense against HDC where instrument was originally incomplete and later completed in unauthorized manner, HDC can enforce as completed
- complete defense against non-HDC
What are the personal defenses (not defenses against HDC)?
Basically your K defenses that aren’t real defenses)
(1) BREACH OF WARRANTY - maker/drawer may not pay
(2) LACK OR FAILURE OF CONSIDERATION
(3) FRAUD IN THE INDUCEMENT - issued based upon a false statement
(4) MENTAL INCAPACITY - if when drafted but not found incompetent by state
(5) Others - discharge by cancellation or payment, unauthorized completion of incomplete document, non-delivery, undue influence, etc.
