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Illinois Compiled Statutes

810 ILCS 5/3-305 (2026)

Defenses and claims in recoupment

✓ current as of May 2026
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(810 ILCS 5/3-305) (from Ch. 26, par. 3-305)
    Sec. 3-305. Defenses and claims in recoupment.
    (a) 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 the 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 Article 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) 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) 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 3-306) 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) 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, or lack of legal capacity.
(Source: P.A. 97-813, eff. 7-13-12.)

    
Notes of Decisions
Cited in 3 cases (3 in the last 5 years), 2021–2026 · leading case: W. & Lake Check Cashers, LLC v. Propane Pete, LLC, 2023 IL App (2d) 220291 (Ill. App. Ct. 2023).
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W. & Lake Check Cashers, LLC v. Propane Pete, LLC, 2023 IL App (2d) 220291 (Ill. App. Ct. 2023). · cites it 5× “3d at 497 (a holder in due course “[takes] the check free from all defenses of any party to the [check] with whom the holder has not dealt except those real defenses enumerated in section 3-305 of the Code [(810 ILCS 5/3-305 (West 2020))].”). Thus, Chase’s prior payment to NFCU…”
Linwood v. Anderson (C.D. Ill. 2021). “Second, she asserts that she “is the maker and drawer and is entitled to recoupment” pursuant to 810 ILCS 5/3-305 and states that the “Bank [S]ecrecy [A]ct requires banks to maintain records showing the source of funds.”
West State Street Check Cashing v. United Equitable Grp., Ltd. (Ill. App. Ct. 2026). “” 810 ILCS 5/3-305(a)(1) (West 2024). These enumerated defenses are called “real defenses.”
— 810 ILCS 5/3-305(a)(1) — 2 cases
W. & Lake Check Cashers, LLC v. Propane Pete, LLC, 2023 IL App (2d) 220291 (Ill. App. Ct. 2023). “3d at 497 (a holder in due course “[takes] the check free from all defenses of any party to the [check] with whom the holder has not dealt except those real defenses enumerated in section 3-305 of the Code [(810 ILCS 5/3-305 (West 2020))].”). Thus, Chase’s prior payment to NFCU…”
West State Street Check Cashing v. United Equitable Grp., Ltd. (Ill. App. Ct. 2026). “” 810 ILCS 5/3-305(a)(1) (West 2024). These enumerated defenses are called “real defenses.”
— 810 ILCS 5/3-305(a)(1)(iv) — 1 case
W. & Lake Check Cashers, LLC v. Propane Pete, LLC, 2023 IL App (2d) 220291 (Ill. App. Ct. 2023). “3d at 497 (a holder in due course “[takes] the check free from all defenses of any party to the [check] with whom the holder has not dealt except those real defenses enumerated in section 3-305 of the Code [(810 ILCS 5/3-305 (West 2020))].”). Thus, Chase’s prior payment to NFCU…”
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