336.3-305 MS 1990 [Repealed, 1992 c 565 s 114
336.3-305 DEFENSES AND CLAIMS IN RECOUPMENT.
(a) Except as otherwise provided in this section, the right to enforce the obligation of a party
to pay an instrument is subject to the following:
(1) a defense of the obligor based on (i) infancy of the obligor to the extent it is a defense to a
simple contract, (ii) duress, lack of legal capacity, or illegality of the transaction which, under
other law, nullifies the obligation of the obligor, (iii) fraud that induced the obligor to sign the
instrument with neither knowledge nor reasonable opportunity to learn of its character or its
essential terms, or (iv) discharge of the obligor in insolvency proceedings;
(2) a defense of the obligor stated in another section of this article or a defense of the obligor
that would be available if the person entitled to enforce the instrument were enforcing a right to
payment under a simple contract; and
(3) a claim in recoupment of the obligor against the original payee of the instrument if the
claim arose from the transaction that gave rise to the instrument; but the claim of the obligor
may be asserted against a transferee of the instrument only to reduce the amount owing on the
instrument at the time the action is brought.
(b) The right of a holder in due course to enforce the obligation of a party to pay the
instrument is subject to defenses of the obligor stated in subsection (a)(1), but is not subject to
defenses of the obligor stated in subsection (a)(2) or claims in recoupment stated in subsection
(a)(3) against a person other than the holder.
(c) Except as stated in subsection (d), in an action to enforce the obligation of a party to pay
the instrument, the obligor may not assert against the person entitled to enforce the instrument a
defense, claim in recoupment, or claim to the instrument (section
) of another person,
but the other person's claim to the instrument may be asserted by the obligor if the other person
is joined in the action and personally asserts the claim against the person entitled to enforce the
instrument. An obligor is not obliged to pay the instrument if the person seeking enforcement
of the instrument does not have rights of a holder in due course and the obligor proves that
the instrument is a lost or stolen instrument.
(d) In an action to enforce the obligation of an accommodation party to pay an instrument, the
accommodation party may assert against the person entitled to enforce the instrument any defense
or claim in recoupment under subsection (a) that the accommodated party could assert against
the person entitled to enforce the instrument, except the defenses of discharge in insolvency
proceedings, infancy, and lack of legal capacity.
(e) In a consumer transaction, if law other than this article requires that an instrument
include a statement to the effect that the rights of a holder or transferee are subject to a claim
or defense that the issuer could assert against the original payee, and the instrument does not
include such a statement:
(1) the instrument has the same effect as if the instrument included such a statement;
(2) the issuer may assert against the holder or transferee all claims and defenses that would
have been available if the instrument included such a statement; and
(3) the extent to which claims may be asserted against the holder or transferee is determined
as if the instrument included such a statement.
(f) This section is subject to law other than this article that establishes a different rule for
History: 1992 c 565 s 33; 2003 c 81 art 1 s 5