The following is for a blog we are posting on the Hwang Bankruptcy Case:
California Commercial Code Section 3203. (a) An instrument is transferred when it is delivered by a
person other than its issuer for the purpose of giving to the person
receiving delivery the right to enforce the instrument.
(b) Transfer of an instrument, whether or not the transfer is a
negotiation, vests in the transferee any right of the transferor to
enforce the instrument, including any right as a holder in due
course, but the transferee cannot acquire rights of a holder in due
course by a transfer, directly or indirectly, from a holder in due
course if the transferee engaged in fraud or illegality affecting the
instrument.
(c) Unless otherwise agreed, if an instrument is transferred for
value and the transferee does not become a holder because of lack of
indorsement by the transferor, the transferee has a specifically
enforceable right to the unqualified indorsement of the transferor,
but negotiation of the instrument does not occur until the
indorsement is made.
(d) If a transferor purports to transfer less than the entire
instrument, negotiation of the instrument does not occur. The
transferee obtains no rights under this division and has only the
rights of a partial assignee.
The following code is to be used for an article we are publishing on the Hwang Bankruptcy Case
from California.
3202. (a) 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) 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rescinded or may be subject to other remedies, but those remedies may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.
