Forbes has published an article, “Understanding The Limits Of The Transferee’s Good Faith Defense In Voidable Transaction Law”, which discusses good faith defense and the Uniform Voidable Transaction Act. The article begins as follows:
The so-called transferee’s good faith defense has often befuddled attorneys and judges alike in its application to the Uniform Voidable Transaction Act (UVTA), as the more modern successor to the Uniform Fraudulent Transfer Act (UFTA). This has resulted in a spate of court opinions that are at best confused and often dead wrong in the reasoning employed. The defense is simply the contemporary incarnation of the same defense, which existed in the English common law, an in various ancient law before that. The defense in its current form posits that if the transferee acted in good faith and gave reasonably equivalent value in exchange for the transfer, then the transaction will not be deemed avoidable, and the transferee will escape liability for the transfer.
What makes the defense confusing is that it applies exclusively and only to the Intent Test of § 4(a), which is known by the misdescriptive term, actual fraudulent transfer. This limited application is found in the relevant statutory test of UVTA § 8 which provides the defenses of the transferee. Subsection (a) states the defense as follows:
“(a) A transfer or obligation is not voidable under Section 4(a)(1) against a person that took in good faith and for a reasonably equivalent value given the debtor or against any subsequent transferee or obligee.”
Click here to see the full article: “Understanding The Limits Of The Transferee’s Good Faith Defense In Voidable Transaction Law”
Posted by Will Frankenberry, Associate Editor, Wealth Strategies Journal