Page:United States Statutes at Large Volume 77.djvu/713

 77 STAT. ]

PUBLIC LAW 88-243-DEC. 30, 1963

(4) Knowledge of the following facts does not of itself give the purchaser notice of a defense or claim (a) that the instrument is antedated or postdated; (b) that it was issued or negotiated in return for an executory promise or accompanied by a separate agreement, unless the purchaser has notice that a defense or claim has arisen from the terms thereof; (c) that any party has signed for accommodation; (d) that an incomplete instrument has been completed, unless the purchaser has notice of any improper completion; (e) that any person negotiating the instrument is or was a fiduciary; (f) that there has been default in payment of interest on the instrument or in payment of any other instrument, except one of the same series. (5) The filing or recording of a document does not of itself constitute notice within the provisions of this article to a person who would otherwise be a holder in due course. (6) To be effective notice must be received at such time and in such manner as to give a reasonable opportunity to act on it. § 28:3—305. Rights of a holder in due course To the extent that a holder is a holder in due course he takes the instrument free from (1) all claims to it on the part of any person; and (2) all defenses of any party to the instrument with whom the liolder has not dealt except (a) infancy, to the extent that it is a defense to a simple contract; and (b) such other incapacity, or duress, or illegality of the transaction, as renders the obligation of the party a nullity; and (c) such misrepresentation as has induced the party to sign the instrument with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms; and (d) discharge in insolvency proceedings; and (e) any other discharge of which the holder has notice when he takes the instrument. § 28:3—306. Rights of one not holder in due course Unless he has the rights of a holder in due course any person takes the instrument subject to (a) all valid claims to it on the part of any person; and (b) all defenses of any party which would be available in an action on a simple contract; and (c) the defenses of want or failure of consideration, nonperformance of any condition precedent, nondelivery, or delivery for a special purpose (section 28:3—408); and (d) the defense that he or a person through whom he holds the instrument acquired it by theft, or that payment or satisfaction to such holder would be inconsistent with the terms of a restrictive indorsement. The claim of any third person to the instrument is not otherwise available as a defense to any party liable thereon unless the third person himself defends the action for such party. § 28:3—307. Burden of establishing signatures, defenses and due course (1) L^nlass specifically denied in the pleadings each signature on an instiiiment is admitted. When the effectiveness of a signature is put in issue

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