Article 3 — Negotiable Instruments · Section 3-305
This section addresses the defenses a party may raise concerning negotiable instruments, outlining the circumstances under which an instrument is considered enforceable.
Source: U.C.C. § 3-305
UCC § 3-305 specifies that the holder of a negotiable instrument is subject to certain defenses, including those that may exist between the original parties, and that defenses based on fraud or illegality may be raised against holders in due course.
UCC § 3-305 allows a party to defend against the enforcement of a negotiable instrument by raising certain defenses. This section makes clear that even if an instrument is transferable, various issues inherent to the transaction may be invoked to contest its enforceability.
A person in possession of a negotiable instrument that is payable either to bearer or to an identified person.
A holder who takes an instrument for value, in good faith, and without notice of any defect or claim.
Example 1
A check written for a service that was never performed may allow the payer to assert a defense against the holder.
Example 2
If a promissory note was signed under duress, the maker may use this as a defense against enforcement by a holder.