Reacquisition (Banking) Law and Legal Definition

Pursuant to U.C.C. § 3-207, an instrument is reacquired when an instrument is transferred to a former holder, by negotiation or otherwise. The former holder who reacquires the instrument can cancel indorsement made after the reacquirer first became a holder of the instrument. A reacquirer can negotiate an instrument when cancellation causes the instrument to be payable to the reacquirer or to a bearer. An indorser whose indorsement is canceled is discharged by reacquisition. Such a discharge is effective against any subsequent holder.