{"data":{"id":"us-ky/krs-355.3-305","jurisdiction":"us-ky","citation":"KRS 355.3-305","heading":"Defenses and claims in recoupment.","body":"(1) Except as stated in subsection (2) of this section, the right to enforce the obligation\nof a party to pay an instrument is subject to the following:\n(a) A defense of the obligor based on:\n1. Infancy of the obligor to the extent it is a defense to a simple contract;\n2. Duress, lack of legal capacity, or illegality of the transaction which,\nunder other law, nullifies the obligation of the obligor;\n3. Fraud that induced the obligor to sign the instrument with neither\nknowledge nor reasonable opportunity to lea rn of its character or its\nessential terms; or\n4. Discharge of the obligor in insolvency proceedings;\n(b) A defense of the obligor stated in another section of this article or a defense of\nthe obligor that would be available if the person entitled to enfor ce the\ninstrument were enforcing a right to payment under a simple contract; and\n(c) A claim in recoupment of the obligor against the original payee of the\ninstrument if the claim arose from the transaction that gave rise to the\ninstrument; but the claim of the obligor may be asserted against a transferee of\nthe instrument only to reduce the amount owing on the instrument at the time\nthe action is brought.\n(2) The right of a holder in due course to enforce the obligation of a party to pay the\ninstrument is subject to defenses of the obligor stated in subsection (1)(a) of this\nsection, but is not subject to defenses of the obligor stated in subsection (1)(b) of\nthis section or claims in recoupment stated in subsection (1)(c) of this section\nagainst a person other than the holder.\n(3) Except as stated in subsection (4) of this section, in an action to enforce the\nobligation of a party to pay the instrument, the obligor may not assert against the\nperson entitled to enforce the instrument a defense, claim in recoupment, or claim to\nthe instrument (KRS 355.3 -306) of another person, but the other person's claim to\nthe instrument may be asserted by the obligor if the other person is joined in the\naction and personally asserts the claim against the person entitled to enforce the\ninstrument. An obligor is not obliged to pay the instrument if the person seeking\nenforcement of the instrument does not have rights of a holder in due course and the\nobligor proves that the instrument is a lost or stolen instrument.\n(4) In an action to enforce the obligation of an accommodation party to pay an\ninstrument, the accommodation party may assert against the person entitled to\nenforce the instrument any defense or claim in recoupment under subsection (1) of\nthis section that the accom modated party could assert against the person entitled to\nenforce the instrument, except the defenses of discharge in insolvency proceedings,\ninfancy, and lack of legal capacity.","path":[],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=33463","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:58:44Z","sha256":"2512b508545686967072c03336da33671893d2e6c67fe56d8948ace49dd10bb9","source_id":"us-ky","stale":false,"prev":"us-ky/krs-355.3-304","next":"us-ky/krs-355.3-306"},"notice":"GroundRules: Original legal text. Not legal advice."}