Code of Alabama
Ala. Code § 7-3-202 (2026)
Negotiation Subject to Rescission.
✓ official Alabama Legislature (ALISON) text, current July 2026
(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(b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good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.
(Acts 1995, No. 95-668, p. 1381, §1.)
Notes of Decisions
Cited in 7
cases, 1986–2002 · leading case: Am. Liberty Ins. Co. v. Amsouth Bank, 825 So. 2d 786 (Ala. 2002).
Am. Liberty Ins. Co. v. Amsouth Bank, 825 So. 2d 786 (Ala. 2002). “Kafko merely negotiated or cashed the check, see § 7-3-202, so its handling of the check does not come within the terms of § 7-3-419.”
Strickland v. Kafko Mfg., Inc., 512 So. 2d 714 (Ala. 1987). “Kafko merely negotiated or cashed the check, see § 7-3-202, so its handling of the check does not come within the terms of § 7-3-419.”
Willson v. MLA, Inc. (In Re Ascot Mortg., Inc.), 153 B.R. 1002 (Bankr. N.D. Ga. 1993). “3-202; Ala.Code § 7-3-202. 12 . Some of the undisputed facts have been recited in part IA of this Memorandum.”
Bradley, Arant, Rose & White, a P'ship v. United States, 802 F.2d 1323 (11th Cir. 1986). “Alabama Code § 7-3-202: (1) Negotiation is the transfer of an instrument in such form that the transferee becomes a holder.”
JLJ, Inc. v. Rush Bldg. Co. (In re JLJ, Inc.), 115 B.R. 324 (Bankr. N.D. Ala. 1990). “as the “holder” of the notes, there does not appear to be any sufficient reason why a similar application of her signature to an assignment of the debt and notes would not be legally sufficient.”
Harris v. Comptronix Corp., 831 F. Supp. 1563 (N.D. Ala. 1993). “To support this claim, plaintiffs rely on Ala. Code § 7-3-202 (1985), which states that a check must be properly endorsed before it may be deposited for payment at a bank.”
Agricola Partners, Inc. v. Parker, 655 So. 2d 967 (Ala. 1995). “” Again, if the authenticity of the letter is shown, this $43,166 is an amount required to arrive at the “total of $664,386” due Parker, as expressed in Hugh Agricola’s letter to her, unless the terms of this letter were either cancelled or modified between July 14, 1993 (the…”
— Ala. Code § 7-3-202(1) — 1 case
JLJ, Inc. v. Rush Bldg. Co. (In re JLJ, Inc.), 115 B.R. 324 (Bankr. N.D. Ala. 1990). “as the “holder” of the notes, there does not appear to be any sufficient reason why a similar application of her signature to an assignment of the debt and notes would not be legally sufficient.”
— Ala. Code § 7-3-202(2) — 1 case
JLJ, Inc. v. Rush Bldg. Co. (In re JLJ, Inc.), 115 B.R. 324 (Bankr. N.D. Ala. 1990). “as the “holder” of the notes, there does not appear to be any sufficient reason why a similar application of her signature to an assignment of the debt and notes would not be legally sufficient.”
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