State Codes and Statutes

Statutes > Utah > Title-70a > Chapter-03 > 70a-3-302

70A-3-302. Holder in due course.
(1) Subject to Subsection (3) and Subsection 70A-3-106(4), "holder in due course"means the holder of an instrument if:
(a) the instrument when issued or negotiated to the holder does not bear such apparentevidence of forgery or alteration or is not otherwise so irregular or incomplete as to call intoquestion its authenticity; and
(b) the holder took the instrument for value, in good faith, without notice that theinstrument is overdue or has been dishonored or that there is an uncured default with respect topayment of another instrument issued as part of the same series, without notice that theinstrument contains an unauthorized signature or has been altered, without notice of any claim tothe instrument described in Section 70A-3-306, and without notice that any party has a defense orclaim in recoupment described in Subsection 70A-3-305(1).
(2) Notice of discharge of a party, other than discharge in an insolvency proceeding, isnot notice of a defense under Subsection (1), but discharge is effective against a person whobecame a holder in due course with notice of the discharge. Public filing or recording of adocument does not of itself constitute notice of a defense, claim in recoupment, or claim to theinstrument.
(3) Except to the extent a transferor or predecessor in interest has rights as a holder indue course, a person does not acquire rights of a holder in due course of an instrument taken:
(a) by legal process or by purchase in an execution, bankruptcy, or creditor's sale orsimilar proceeding;
(b) by purchase as part of a bulk transaction not in ordinary course of business of thetransferor; or
(c) as the successor in interest to an estate or other organization.
(4) If, under Subsection 70A-3-303(1)(a), the promise of performance that is theconsideration for an instrument has been partially performed, the holder may assert rights as aholder in due course of the instrument only to the fraction of the amount payable under theinstrument equal to the value of the partial performance divided by the value of the promisedperformance.
(5) If the person entitled to enforce an instrument has only a security interest in theinstrument, and the person obliged to pay the instrument has a defense, claim in recoupment, orclaim to the instrument that may be asserted against the person who granted the security interest,the person entitled to enforce the instrument may assert rights as a holder in due course only to anamount payable under the instrument which, at the time of enforcement of the instrument, doesnot exceed the amount of the unpaid obligation secured.
(6) To be effective, notice must be received at a time and in a manner that gives areasonable opportunity to act on it.
(7) This section is subject to any law limiting status as a holder in due course inparticular classes of transactions.

Repealed and Re-enacted by Chapter 237, 1993 General Session