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California Commercial Code Section 3305

Legal Research Home > California Lawyer > Commercial Code > California Commercial Code Section 3305

(a) Except as stated in subdivision (b), the right to enforce
the obligation of a party to pay an instrument is subject to all of
the following:
   (1) A defense of the obligor based on (A) infancy of the obligor
to the extent it is a defense to a simple contract, (B) duress, lack
of legal capacity, or illegality of the transaction which, under
other law, nullifies the obligation of the obligor, (C) 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 (D) discharge of the obligor in insolvency proceedings.
   (2) A defense of the obligor stated in another section of this
division 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.
   (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 paragraph (1) of subdivision (a), but is not
subject to defenses of the obligor stated in paragraph (2) of
subdivision (a) or claims in recoupment stated in paragraph (3) of
subdivision (a) against a person other than the holder.
   (c) Except as stated in subdivision (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
3306) 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 subdivision (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.

Last modified: March 8, 2010