2009 Iowa Code
Title 13 - Commerce
Subtitle 5 - Regulation of Commercial Enterprises
CHAPTER 554 - UNIFORM COMMERCIAL CODE
554.3305 - DEFENSES AND CLAIMS IN RECOUPMENT.

        554.3305  DEFENSES AND CLAIMS IN RECOUPMENT.
         1.  Except as stated in subsection 2, the right to enforce the
      obligation of a party to pay an instrument is subject to the
      following:
         a.  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;
         b.  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
         c.  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.
         2.  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 1, paragraph "a", but is not subject
      to defenses of the obligor stated in subsection 1, paragraph "b",
      or claims in recoupment stated in subsection 1, paragraph "c",
      against a person other than the holder.
         3.  Except as stated in subsection 4, 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
      554.3306) 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.
         4.  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 1 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.  

         94 Acts, ch 1167, §40, 121, 122
         Referred to in § 554.3302, 554.4207, 554.9403