Negotiable Instrument Defenses

There are 2 kinds of defenses in negotiable instruments: personal and real

Real Defenses

1.) Minority

2.) Forgery

3.) Non-delivery of an incomplete instrument

4.) Material alteration

5.) Ultra vires act of the corporation

6.) Fraud in factum/esse contractus

7.) illegality (if declared void for any purpose)

8.) Force/violence

9.) Lack of authority

10.) Prescription

11.) Discharge in insolvency

Personal Defenses

1.) Failure/absence of consideration

2.) Illegal consideration

3.) Non-delivery of a complete instrument

4.) Conditional delivery of a complete instrument

5.) Fraud in inducement

6.) Filling up blank not within authority

7.) Duress/intimidation

8.) Filling up blank beyond reasonable time

9.) Transfer in breach of faith

10.) Mistake

11.) Insertion of wrong date

12.) Ante-dating or post-dating for illegal/fraudulent purposes

Real/absolute defenses attach to the instrument and are available against all holders, whether in due course or not, but only the entitled party/ies can raise them. Personal/equitable defenses are available only against the holder standing in privity with the party entitled to the defense or those who don't have the rights of a holder in due course.