N.Y. Uniform Commercial Code 3-305 – Rights of a Holder in Due Course
Section 3–305. Rights of a Holder in Due Course.
Terms Used In N.Y. Uniform Commercial Code 3-305
- Contract: A legal written agreement that becomes binding when signed.
- Instrument: means a negotiable instrument. See N.Y. Uniform Commercial Code 3-102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
To the extent that a holder is a holder in due course he takes the instrument free from
(1) all claims to it on the part of any person; and
(2) all defenses of any party to the instrument with whom the holder has not dealt except
(a) infancy, to the extent that it is a defense to a simple
contract; and
(b) such other incapacity, or duress, or illegality of the
transaction, as renders the obligation of the party a
nullity; and
(c) such misrepresentation as has induced the party to sign the
instrument with neither knowledge nor reasonable opportunity
to obtain knowledge of its character or its essential terms;
and
(d) discharge in insolvency proceedings; and
(e) any other discharge of which the holder has notice when he
takes the instrument.