{"data":{"id":"us-ky/krs-355.3-302","jurisdiction":"us-ky","citation":"KRS 355.3-302","heading":"Holder in due course.","body":"(1) Subject to subsection (3) of this section and KRS 355.3 -106(4), \"holder in due\ncourse\" means the holder of an instrument if:\n(a) The instrument when issued or negotiated to the holder does not bear such\napparent evidence of forgery or alteration or is not otherwise so irregular or\nincomplete as to call into question its authenticity; and\n(b) The holder took the instrument:\n1. For value;\n2. In good faith;\n3. Without notice that the instrument is overdue or has been dishonored or\nthat there is an uncured defa ult with respect to payment of another\ninstrument issued as part of the same series;\n4. Without notice that the instrument contains an unauthorized signature or\nhas been altered;\n5. Without notice of any claim to the instrument described in KRS 355.3 -\n306; and\n6. Without notice that any party has a defense or claim in recoupment\ndescribed in KRS 355.3-305(1).\n(2) Notice of discharge of a party, other than discharge in an insolvency proceeding, is\nnot notice of a defense under subsection (1) of this section, but discharge is\neffective against a person who became a holder in due course with notice of the\ndischarge. Public filing or recording of a document does not of itself constitute\nnotice of a defense, claim in recoupment, or claim to the instrument.\n(3) Except to the extent a transferor or predecessor in interest has rights as a holder in\ndue course, a person does not acquire rights of a holder in due course of an\ninstrument taken:\n(a) By legal process or by purchase in an execution, bankruptcy, or creditor' s sale\nor similar proceeding;\n(b) By purchase as part of a bulk transaction not in ordinary course of business of\nthe transferor; or\n(c) As the successor in interest to an estate or other organization.\n(4) If, under KRS 355.3-303(1)(a), the promise of performance that is the consideration\nfor an instrument has been partially performed, the holder may assert rights as a\nholder in due course of the instrument only to the fraction of the amount payable\nunder the instrument equal to the value of the partial performance divided by the\nvalue of the promised performance.\n(5) If:\n(a) The person entitled to enforce an instrument has only a security interest in the\ninstrument; and\n(b) The person obliged to pay the inst rument has a defense, claim in recoupment,\nor claim to the instrument that may be asserted against the person who granted\nthe security interest,\nthe person entitled to enforce the instrument may assert rights as a holder in due\ncourse only to an amount pa yable under the instrument which, at the time of\nenforcement of the instrument, does not exceed the amount of the unpaid obligation\nsecured.\n(6) To be effective, notice must be received at a time and in a manner that gives a\nreasonable opportunity to act on it.\n(7) This section is subject to any law limiting status as a holder in due course in\nparticular classes of transactions.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=33460","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:44Z","sha256":"b87da3da4dfaf782ddbd98401df7393dc5766dce171873cb38412f2a428ce9b9","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.3-301","next":"us-ky/krs-355.3-303"},"notice":"GroundRules: Original legal text. Not legal advice."}