The Negotiation of an Instrument Made in Breach of Duty

question 23

Multiple Choice

The negotiation of an instrument made in breach of duty is subject to ________ before the instrument has been negotiated to a transferee who can qualify as a holder in due course.

• A)rescission
• B)remission
• C)restitution
• D)reformation

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Definitions:

Undue Influence

An illegitimate power exercised by one person over another in order to induce the latter to make a decision or a legal transaction that greatly benefits the former.

Non Est Factum

A legal defense claiming that a contract is invalid because the signer was unaware of its nature due to an honest mistake.

Functionally Illiterate

The condition of having limited reading and writing skills that are insufficient for everyday needs.

Mistake of Fact

A misunderstanding or incorrect belief regarding a fact that is material to a contract at the time of its formation, potentially rendering the contract voidable.