O.C.G.A.
O.C.G.A.

O.C.G.A. § 11-3-202 (2019)

Negotiation subject to rescission

✓ O.C.G.A. — 2019 edition (Public.Resource.Org Release 73)
Code text and O.C.G.A. statutory annotations on this page reflect the 2019 Official Code of Georgia Annotated (Public.Resource.Org Release 73, 2019-08-21; public domain per Georgia v. Public.Resource.Org, 2020). The Syfert case-law annotations in Notes of Decisions, below, are current.
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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 (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good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.

History

Code 1981, § 11-3-202, enacted by Ga. L. 1996, p. 1306, § 3.

Annotations

JUDICIAL DECISIONS Editor’s notes. - In light of the similarity of the statutory provisions, decisions under former Code Section 11-3-207 are included in the annotations for this Code section. Defendant may waive claim of duress. - Where the plaintiff accepted compensation and performed services under a

written contract, and never sought to rescind the contract or return the benefits obtained thereunder, the plaintiff waived any claim of duress. Walton v. James & Dean, Inc., 177 Ga. App. 77, 338 S.E.2d 516, 1985 Ga. App. LEXIS 2485 (1985) (decided under former Code Section 11-3207).

RESEARCH REFERENCES Am. Jur. 2d. 11 Am. Jur. 2d, Bills and Notes, §§ 215, 216, 236. 12 Am. Jur. 2d, Bill and Notes, § 610. C.J.S. 10 C.J.S., Bills and Notes, §§ 159, 161. U.L.A. Uniform Commercial Code (U.L.A.) § 3202. ALR. Invalidity of note as affecting liability of endorser to endorsee or subsequent holder, 16 A.L.R. 1377.

Effect of Negotiable Instruments Act on statute invalidating instrument given for gambling consideration, 37 A.L.R. 698; 46 A.L.R. 959. Statement made to prospective transferree at time of execution of obligation, negativing defense or offset against obligation, as affecting right to set up defense of fraud, 60 A.L.R. 1180. Construction and effect of provision of Negotiable Instrument Law as to endorsement or assignment of instrument by infant or corporation, 73 A.L.R. 172.

Notes of Decisions
Cited in 9 cases, 1983–1998 · leading case: Weldon v. Trust Co. Bank of Columbus, N.A., 499 S.E.2d 393 (Ga. Ct. App. 1998).
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Weldon v. Trust Co. Bank of Columbus, N.A., 499 S.E.2d 393 (Ga. Ct. App. 1998). · cites it 4× “Under OCGA § 11-3-202 (1), delivery of the cashier’s check to the payee resulted in its negotiation.”
Bank South, N.A. v. Midstates Grp., Inc., 364 S.E.2d 58 (Ga. Ct. App. 1987). · cites it 2× “” OCGA § 11-3-202 (1, 2). On its back, the certificate of deposit contains the purported special indorsement of Midstates to pay the instrument to the order of the Bank (see OCGA § 11-3-204 (1)), which indorsement reflects that it was made by Williams acting in his capacity as a…”
Bank of Danielsville v. Seagraves, 305 S.E.2d 790 (Ga. Ct. App. 1983). · cites it 2× “§ 109A-3— 202(1) (OCGA § 11-3-202(1)). The notes in the instant case were made payable to the order of the Bank, and thereafter to the “holder.”
Willson v. MLA, Inc. (In Re Ascot Mortg., Inc.), 153 B.R. 1002 (Bankr. N.D. Ga. 1993). · cites it 2× “O.C.G.A. § 11-3-202; Fla.Stat.Ann. § 673.”
Carter v. Davenport, 334 S.E.2d 876 (Ga. Ct. App. 1985). · cites it 4× “OCGA § 11-3-202 states that negotiation is a form of transferring an instrument whereby the transferee becomes a holder and requires both endorsement and delivery of the instrument.”
Lee v. Muller, 407 S.E.2d 108 (Ga. Ct. App. 1991). · cites it 2× “135, 139 ( 305 SE2d 790 ) (1983); see also OCGA § 11-3-202. A transfer without an indorsement is an assignment, and, although the UCC does not prohibit the transfer of commercial paper without an indorsement, the assignee takes subject to any defense which could be raised…”
Adams v. State, 458 S.E.2d 918 (Ga. Ct. App. 1995). · cites it 2× “See generally OCGA § 11-3-202. Similarly, proof of uttering or delivery is required as an element of forgery under OCGA § 16-9-1.”
Mustin v. Citizens & S. Nat'l Bank, 309 S.E.2d 822 (Ga. Ct. App. 1983). · cites it 2× “UCC 3-202 (1) [OCGA § 11-3-202 (1) (Code Ann. § 109A-3 — 202)] .”
Citizens & S. Nat'l Bank v. Sun Belt Elec. Constructors, Inc. (In Re Sun Belt Elec. Constructors, Inc.), 64 B.R. 377 (Bankr. N.D. Ga. 1986). · cites it 2× “See O.C.G.A. § 11-3-202(1) (defining negotiation).”
— 11-3-202(1) — 2 cases
Bank of Danielsville v. Seagraves, 305 S.E.2d 790 (Ga. Ct. App. 1983). “§ 109A-3— 202(1) (OCGA § 11-3-202(1)). The notes in the instant case were made payable to the order of the Bank, and thereafter to the “holder.”
Citizens & S. Nat'l Bank v. Sun Belt Elec. Constructors, Inc. (In Re Sun Belt Elec. Constructors, Inc.), 64 B.R. 377 (Bankr. N.D. Ga. 1986). “See O.C.G.A. § 11-3-202(1) (defining negotiation).”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.