Also known as: apparent evidence of forgery · apparent evidence of alteration
Written by attorneys · grounded in primary & secondary sources — see below
A visible irregularity on a negotiable instrument indicating possible forgery or alteration that precludes the holder from achieving holder-in-due-course status.
Andre Antoine negotiates a promissory note to Atlas Ventures. The note shows a crossed-out and rewritten dollar amount that is obvious on its face. Atlas Ventures cannot claim holder-in-due-course status because the visible change calls the instrument's authenticity into question under the governing rule.
Amber Alonzo presents several checks to a bank for deposit. The signatures on the checks display clear signs of forgery that a reasonable inspector would notice immediately. The bank cannot qualify as a holder in due course because the apparent forgery prevents satisfaction of the authenticity requirement.
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It operates as a conclusive presumption of notice that disqualifies the holder. The rule prevents anyone taking such an instrument from satisfying the requirements of UCC § 3-302(a)(1).
Supporting sources
Such instruments are treated the same as those bearing apparent forgery or alteration. They call authenticity into question and block holder-in-due-course status even without actual knowledge of a defect.
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The party claiming holder-in-due-course status must prove by a preponderance that the instrument lacks such evidence. Failure to meet this burden defeats the claim.
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