§ 3202 — Negotiation subject to rescission

(a) General rule.--Negotiation is effective even if obtained:

(1) from an infant, a corporation exceeding its powers or a person without capacity;

(2) by fraud, duress or mistake; or

(3) in breach of duty or as part of an illegal transaction.

(b) Rescission or other remedies.--To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in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