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Colorado Revised Statutes

Colo. Rev. Stat. § 4-3-202 (2026)

Negotiation subject to rescission

✓ current as of July 2026
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(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 (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good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.

Source: L. 94: Entire article R&RE, p. 850, § 1, effective January 1, 1995.

Editor's note: This section is similar to former § 4-3-207 as it existed prior to 1994.

Notes of Decisions
Cited in 9 cases, 1975–2008 · leading case: Lamson v. Com. Credit Corp., 531 P.2d 966 (Colo. 1975).
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Lamson v. Com. Credit Corp., 531 P.2d 966 (Colo. 1975). · cites it 6× “It was this interpretation of section 4-3-202(2) which prompted us to grant certiorari.”
Kelly v. Cent. Bank & Trust Co. of Denver, 794 P.2d 1037 (Colo. Ct. App. 1990). · cites it 4× “See § 4-3-202, C.R.S. The question of whether the payee's indorsement is authorized, however, does not arise unless there is an indorsement in the first place.”
La Junta State Bank v. Travis, 727 P.2d 48 (Colo. 1986). · cites it 5× “See §§ 4-3-202, -204; 2 F. Hart and W. Willier, Commercial Paper Under the Uniform Commercial Code § 3.”
Pierce v. DeZeeuw, 824 P.2d 97 (Colo. Ct. App. 1991). · cites it 8× “See § 4-3-202(1), C.R.S. In contrast, the transfer of a negotiable instrument by assignment may or may not involve an indorsement.”
Delsas Ex Rel. Delsas v. Centex Home Equity Co., 186 P.3d 141 (Colo. Ct. App. 2008). · cites it 2× “"); § 4-3-202(b), C.R.S. 2007 (the remedy of rescission of a negotiable instrument "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"); West v.”
Pay Ctr., Inc. v. Milton, 632 P.2d 642 (Colo. Ct. App. 1981). · cites it 2× “1973, since the note had not been properly negotiated through endorsement and delivery under § 4-3-202, C.R.S.1973, and therefore, directed a verdict for defendant Ferdinand Milton.”
Fin. Mgmt. Task Force, Inc. v. Altberger, 807 P.2d 1230 (Colo. Ct. App. 1990). · cites it 2× “Defendant next contends the note had not been properly negotiated through endorsement and delivery under § 4-3-202, C.R.S. Defendant therefore argues that plaintiff was not the proper party to bring this action.”
Hollemon v. Murray, 666 P.2d 1107 (Colo. Ct. App. 1982). · cites it 2× “Conflicting evidence was presented as to plaintiffs’ knowledge concerning Woodmoor’s financial condition at the time of the delivery of the lot purchasers’ notes in June 1973, the status of defendant’s note at that time, whether the transfer document was an endorsement (see §…”
First Nat'l Bank of Tribune v. Lohman, 827 P.2d 583 (Colo. Ct. App. 1992). · cites it 2× “When read together, the documents establish that the trustee’s function was to exercise the rights of CSBC and to liquidate all assets for the purpose indicated. A trustee may constitute an authorized representative of the settlor under the Uniform Commercial Code.”
— Colo. Rev. Stat. § 4-3-202(1) — 2 cases
La Junta State Bank v. Travis, 727 P.2d 48 (Colo. 1986). “See §§ 4-3-202, -204; 2 F. Hart and W. Willier, Commercial Paper Under the Uniform Commercial Code § 3.”
Pierce v. DeZeeuw, 824 P.2d 97 (Colo. Ct. App. 1991). “See § 4-3-202(1), C.R.S. In contrast, the transfer of a negotiable instrument by assignment may or may not involve an indorsement.”
— Colo. Rev. Stat. § 4-3-202(2) — 4 cases
Lamson v. Com. Credit Corp., 531 P.2d 966 (Colo. 1975). “It was this interpretation of section 4-3-202(2) which prompted us to grant certiorari.”
La Junta State Bank v. Travis, 727 P.2d 48 (Colo. 1986). “See §§ 4-3-202, -204; 2 F. Hart and W. Willier, Commercial Paper Under the Uniform Commercial Code § 3.”
Pierce v. DeZeeuw, 824 P.2d 97 (Colo. Ct. App. 1991). “See § 4-3-202(1), C.R.S. In contrast, the transfer of a negotiable instrument by assignment may or may not involve an indorsement.”
First Nat'l Bank of Tribune v. Lohman, 827 P.2d 583 (Colo. Ct. App. 1992). “When read together, the documents establish that the trustee’s function was to exercise the rights of CSBC and to liquidate all assets for the purpose indicated. A trustee may constitute an authorized representative of the settlor under the Uniform Commercial Code.”
— Colo. Rev. Stat. § 4-3-202(4) — 2 cases
Pierce v. DeZeeuw, 824 P.2d 97 (Colo. Ct. App. 1991). “See § 4-3-202(1), C.R.S. In contrast, the transfer of a negotiable instrument by assignment may or may not involve an indorsement.”
Hollemon v. Murray, 666 P.2d 1107 (Colo. Ct. App. 1982). “Conflicting evidence was presented as to plaintiffs’ knowledge concerning Woodmoor’s financial condition at the time of the delivery of the lot purchasers’ notes in June 1973, the status of defendant’s note at that time, whether the transfer document was an endorsement (see §…”
— Colo. Rev. Stat. § 4-3-202(b) — 1 case
Delsas Ex Rel. Delsas v. Centex Home Equity Co., 186 P.3d 141 (Colo. Ct. App. 2008). “"); § 4-3-202(b), C.R.S. 2007 (the remedy of rescission of a negotiable instrument "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"); West v.”
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