Real Defenses. Real defenses are defenses of somewhat unusual character that occurs not the merit of the transaction, but rather the nature of the instrument itself. They are sometimes called absolute defenses because they are good against even the holder in due course.
Mistakes Which Renders a Contract Void. These mistakes made in the execution of a negotiable contract constitute a good defense against even a holder in due course.
Fraud in the Inception. Fraud in the inception, which is one of the mistakes that render an agreement void, is a real defense and exists when a person is induced by fraud, without negligence on his part, to sign a negotiable instrument that he believes is an instrument of some other character. Since the party primarily liable has no intentions of creating a negotiable instrument, none is created.
From another book, “Contracts”, third edition, Brian a Blum. “THE LAW IS A FACT, SO THAT A MISTAKE IN LAW IS COVERED BY MISTAKE DOCTRINE”
After taking some pains to learn the difference between fact and law, you may be disappointed to find that this is one area in which the distinction does not apply. Although older cases did not regard an error in law as a mistake of fact, it is now accepted that the legal rules governing or pertinent to the transaction do qualify as facts. They constitute an existing state of affairs that can be objectively ascertained. For an example, a piece of beachfront land is sold to a buyer who intends to
build a vacation home on it. The parties are unaware that the land is in an environmental protection zone and a state statue prohibits all building on it. Their ignorance of the law is a mistake of fact. (§15.2.1)
