Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Courses
  • Home
  • Law, Transactions, & Risk Management
  • Commercial Law: Contract, Payments, Security Interests, & Bankruptcy

Claim in Recoupment Applicable to Negotiable Instrument

Whta is a Claim in Recoupment?

Written by Jason Gordon

Updated at December 1st, 2020

Contact Us

If you still have questions or prefer to get help directly from an agent, please submit a request.
We’ll get back to you as soon as possible.

Please fill out the contact form below and we will reply as soon as possible.

  • Accounting, Taxation, and Reporting
    Managerial & Financial Accounting & Reporting Business Taxation
  • Law, Transactions, & Risk Management
    Government, Legal System, Administrative Law, & Constitutional Law Legal Disputes - Civil & Criminal Law Agency Law HR, Employment, Labor, & Discrimination Business Entities, Corporate Governance & Ownership Business Transactions, Antitrust, & Securities Law Real Estate, Personal, & Intellectual Property Commercial Law: Contract, Payments, Security Interests, & Bankruptcy Consumer Protection Insurance & Risk Management Immigration Law Environmental Protection Law Inheritance, Estates, and Trusts
  • Marketing, Advertising, Sales & PR
    Principles of Marketing Sales Advertising Public Relations SEO, Social Media, Direct Marketing
  • Business Management & Operations
    Operations, Project, & Supply Chain Management Strategy, Entrepreneurship, & Innovation Business Ethics & Social Responsibility Global Business, International Law & Relations Business Communications & Negotiation Management, Leadership, & Organizational Behavior
  • Economics, Finance, & Analytics
    Economic Analysis & Monetary Policy Research, Quantitative Analysis, & Decision Science Investments, Trading, and Financial Markets Banking, Lending, and Credit Industry Business Finance, Personal Finance, and Valuation Principles
  • Professionalism & Career Development
  • Courses
+ More

What is a claim in recoupment?

A claim in recoupment is similar to a personal defense. It allows a payor to offset any claim that she has against the claimant or the original issuee.

Note: A claim in recoupment applies against a holder, but not a holder in due course.

Example: The payee on an instrument owes a debt to the named payor. If a subsequent holder presents the instrument for payment, the payor may offset that claim against payment to the holder. If, however, the payee is a holder in due course, the payor cannot offset that claim.

Next Article: Holder in Due Course - Consumer Transactions Back to: COMMERCIAL PAPER

Discussion: Why do you think a claim in recoupment is enforceable against a holder but not a HDC? Do you agree with this?

Practice Question: Evan enters into a contract with Frank. As part of the contract, Evan issues a promissory note to Frank. Frank fails to fully perform some immaterial aspects of the contract. This entitles Evan to offset of the payment price owed to Frank. If Frank presents the note for payment, what is the result? What if he trades the note to Ernest, who qualifies as an HDC?

Was this article helpful?

Yes
No

Related Articles

  • Methods of Resolving Breach of Contract
  • Patent and Latent Ambiguities in a Contract
  • Section 362 Automatic Stay in Bankruptcy
  • Backup Line of Credit - Definition

©2011-2021. The Business Professor, LLC.
  • Privacy

  • Questions

Definition by Author

0
0
Expand