real defenses Flashcards
Real Defenses
- available against holder
- available against HDC
personal defenses
- available against holder
- not available against HDC
real defenses (against HDC or holder)
- infancy
- incapacity
- duress
- illegality
- fraud
- discharge of insolvency proceedings (bankruptcy)
- alteration and forgery
- SOL
infancy
-can assert this defense in states where Ks with minors are either void or voidable
incapacity
-state law must render K with these parties void
duress
- matter of degree
- extreme duress v. threat of something bad happening
- state law must make K made under duress is void
illegality
- an obligor may assert this defense when state law states that notes drawn for the purpose of reimbursing or repaying $ lent for gaming are void
fraud
- fraud in the factum= real defense
- fraud in the inducement- personal defense
Factum= (1) signer is not aware that he is signing a negotiable instrument AND (2) he must not have had a reasonable opportunity to become aware (celeb signing autograph)
Inducement= signer is aware that he is signing a negotiable instrument but signer is induced into signing based on misrepresentation (car has 40k miles not 500)
discharge of insolvency proceedings (bankruptcy)
if an obligor has had his debts discharged through bankruptcy proceedings, that discharge is a real defense
alterations and forgery
- any type of alteration or forgery that is apparent enough to cause a reasonable person to question its authenticity can be asserted as a real defense
SOL-drafts
- for unaccepted drafts- 3 years from date of dishonor OR 10 years from the date of draft, whichever is earlier
- for certified teller’s, cashier’s, or traveler’s checks, if presenting, 3 years after demand for payment
SOL- Notes
- for notes payable at a definite time, the action must be brought within 6 years of the note’s due date
- for notes payable on demand, the action must be brought within 6 years after demand for payment
