2012 Pennsylvania Consolidated Statutes
Title 13 - COMMERCIAL CODE
Chapter 33 - Enforcement of Instruments
Section 3305 - Defenses and claims in recoupment

     § 3305.  Defenses and claims in recoupment.
        (a)  General rule.--Except as stated in subsection (b), the
     right to enforce the obligation of a party to pay an instrument
     is subject to the following:
            (1)  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;
            (2)  a defense of the obligor stated in another section
        of this division 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
            (3)  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.
        (b)  Right of holder in due course to enforce obligation.--
     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 (a)(1), but is not subject to
     defenses of the obligor stated in subsection (a)(2) or claims in
     recoupment stated in subsection (a)(3) against a person other
     than the holder.
        (c)  Claims and defenses of person other than obligor on
     instrument.--Except as stated in subsection (d), 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 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.
        (d)  Instrument signed for accommodation.--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 (a) 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.

        Cross References.  Section 3305 is referred to in sections
     3302, 4207, 9403 of this title.