2012 Pennsylvania Consolidated Statutes
Title 13 - COMMERCIAL CODE
Chapter 33 - Enforcement of Instruments
Section 3302 - Holder in due course

     § 3302.  Holder in due course.
        (a)  Definition of "holder in due course".--Subject to
     subsection (c) and section 3106(d) (relating to unconditional
     promise or order), "holder in due course" means the holder of an
     instrument if:
            (1)  the instrument when issued or negotiated to the
        holder does not bear such apparent evidence of forgery or
        alteration or is not otherwise so irregular or incomplete as
        to call into question its authenticity; and
            (2)  the holder took the instrument:
                (i)  for value;
                (ii)  in good faith;
                (iii)  without notice that the instrument is overdue
            or has been dishonored or that there is an uncured
            default with respect to payment of another instrument
            issued as part of the same series;
                (iv)  without notice that the instrument contains an
            unauthorized signature or has been altered;
                (v)  without notice of any claim to the instrument
            described in section 3306 (relating to claims to an
            instrument); and
                (vi)  without notice that any party has a defense or
            claim in recoupment described in section 3305(a)
            (relating to defenses and claims in recoupment).
        (b)  Notice of discharge.--Notice of discharge of a party,
     other than discharge in an insolvency proceeding, is not notice
     of a defense under subsection (a), but discharge is effective
     against a person who became a holder in due course with notice
     of the discharge. Public filing or recording of a document does
     not of itself constitute notice of a defense, claim in
     recoupment or claim to the instrument.
        (c)  When one does not acquire rights of holder in due
     course.--Except to the extent a transferor or predecessor in
     interest has rights as a holder in due course, a person does not
     acquire rights of a holder in due course of an instrument taken:
            (1)  by legal process or by purchase in an execution,
        bankruptcy or creditor's sale or similar proceeding;
            (2)  by purchase as part of a bulk transaction not in
        ordinary course of business of the transferor; or
            (3)  as the successor in interest to an estate or other
        organization.
        (d)  Limited right as holder in due course; partial
     performance.--If, under section 3303(a)(1) (relating to value
     and consideration), the promise of performance that is the
     consideration for an instrument has been partially performed,
     the holder may assert rights as a holder in due course of the
     instrument only to the fraction of the amount payable under the
     instrument equal to the value of the partial performance divided
     by the value of the promised performance.
        (e)  Limited right as holder in due course; security
     interest.--If:
            (1)  the person entitled to enforce an instrument has
        only a security interest in the instrument; and
            (2)  the person obliged to pay the instrument has a
        defense, claim in recoupment or claim 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 an amount payable under the
     instrument which, at the time of enforcement of the instrument,
     does not exceed the amount of the unpaid obligation secured.
        (f)  Manner of notice.--To be effective, notice must be
     received at a time and in a manner that gives a reasonable
     opportunity to act on it.
        (g)  Applicability of other law.--This section is subject to
     any law limiting status as a holder in due course in particular
     classes of transactions.

        Cross References.  Section 3302 is referred to in sections
     3103, 4104, 4205, 4211, 9102 of this title.