Ohio Rev. Code » Chapter 1303
Ohio Revised Code

Ohio Rev. Code § 1303.35 (2026)

Defenses and claims in recoupment - UCC 3-305

✓ current as of May 2026
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Effective:
April 6, 2017
Latest Legislation:
House Bill 463 - 131st General Assembly
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(A) Except as otherwise stated in this section, the right to enforce the obligation of a party to pay an instrument is subject to all of the following:

(1) A defense of the obligor based on any of the following:

(a) Infancy of the obligor to the extent it is a defense to a simple contract;

(b) Duress, lack of legal capacity, or illegality of the transaction that, under other law, nullifies the obligation of the obligor;

(c) Fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to learn of its character or its essential terms;

(d) Discharge of the obligor in insolvency proceedings.

(2) A defense of the obligor set forth in a section of this chapter 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;

(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 the defenses of the obligor stated in division (A)(1) of this section but is not subject to defenses of the obligor stated in division (A)(2) of this section or to claims in recoupment stated in division (A)(3) of this section against a person other than the holder.

(C) Except as stated in division (D) of this section, 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, a claim in recoupment, or a claim of another person to the instrument under division (C) of section 1303.36 of the Revised Code, 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 required 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 division (A) of this section 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.

(E) In a consumer transaction, if any law other than this chapter req uires that an instrument include a statement to the effect that the rights of a holder or transferee are subject to a claim or defense that the issuer could assert against the original payee, and the instrument does not include such a statement, all of the following apply:

(1) The instrument has the same effect as if the instrument included such a statement.

(2) The issuer may assert against the holder or transferee all claims and defenses that would have been available if the instrument included such a statement.

(3) The extent to which claims may be asserted against the holder or transferee is determined as if the instrument included such a statement.

(F) This section is subject to any law, other than this chapter, that establishes a different rule for consumer transactions.
Notes of Decisions
Cited in 27 cases (1 in the last 5 years), 1965–2022 · leading case: Bank of Am., N.A. v. Pasqualone, 2013 Ohio 5795 (Ohio Ct. App. 2013).
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Bank of Am., N.A. v. Pasqualone, 2013 Ohio 5795 (Ohio Ct. App. 2013). · cites it 8× “11 The right to payment of a person entitled to enforce the note, who also has the status as a holder in due course, is subject to the defenses of the obligor stated in division (A)(1) of R.C. 1303.35 but is not subject to defenses of the obligor stated in division (A)(2) of R.”
Deutsche Bank Nat'l Trust Co. v. Pevarski, 932 N.E.2d 887 (Ohio Ct. App. 2010). · cites it 4× “Chapter 1303 covers negotiable instruments, and R.C. 1303.35 addresses “[djefenses and claims in recoupment.”
Dice v. White Fam. Companies, Inc., 878 N.E.2d 1105 (Ohio Ct. App. 2007). “See R.C. 1303.35. Thus, while good faith would not be a defense to a conversion claim, a defendant who qualifies as a holder in due course could be exempt from liability.”
U.S. Bank Nat'l Ass'n v. Courthouse Crossing Acquisitions, LLC, 2017 Ohio 9231 (Ohio Ct. App. 2017). · cites it 2× “60(B) did not meet the criteria for "a denial, defense or recoupment claim found in R.C. 1303.35 or 1303.36." Id. at ¶ 46, citing Pasqualone at ¶ 36.”
Buckeye Check Cashing, Inc. v. Camp, 825 N.E.2d 644 (Ohio Ct. App. 2005). · cites it 2× “36 of the Revised Code; {¶ 18} “(f) Without notice that any party has a defense or claim in recoupment described in division (A) of section 1303.35 of the Revised Code.” (Emphasis added.”
CitiMortgage, Inc. v. Hoge, 2011 Ohio 3839 (Ohio Ct. App. 2011). “{¶ 20} R.C. 1303.35(A)(1)(c) provides that fraud is still a valid defense even against a holder in due course.”
Flagstar Bank, F.S.B. v. Richison, 2012 Ohio 3198 (Ohio Ct. App. 2012). · cites it 2× “However, if the defendant proves a defense or claim enumerated in R.C. 1303.35, then the plaintiff’s right to payment becomes subject to the asserted defense or claim, except to the extent that the plaintiff proves he or she -6- Case No.”
Nationstar Mtge., L.L.C. v. West, 2014 Ohio 735 (Ohio Ct. App. 2014). “{¶ 45} R.C. 1303.35(A) contains certain defenses to enforcement of notes.”
Bank of Am. v. Macho, 2011 Ohio 5495 (Ohio Ct. App. 2011). “Therefore, Macho is not prevented from using WaMu’s conduct as a defense against BofA’s claims against her, but she is required to follow the FDIC claims process to assert causes of action against WaMu.”
All Am. Fin. Co. v. Pugh Shows, Inc., 507 N.E.2d 1134 (Ohio 1987). “R.C. 1303.35 (UCC 3-306). I Five criteria must be satisfied to establish holder in due course status: (1) one must be a holder, (2) of a negotiable instrument, (3) taken for value, (4) in good faith, and (5) without notice that it is overdue or has been dishonored or of any…”
City Rentals, Inc. v. Kesler, 2010 Ohio 6264 (Ohio Ct. App. 2010). “; see also R.C. 1303.35 (listing the claims and defenses in recoupment).”
Banco Ganadero y Agricola, S.A. v. Soc'y Nat'l Bank of Cleveland, 418 F. Supp. 520 (N.D. Ohio 1976). · cites it 2× “Ohio Rev.Code §§ 1303.35 and 1303.44 (U.C.”
Show all 27 citing cases →
— Ohio Rev. Code § 1303.35(A) — 3 cases
Nationstar Mtge., L.L.C. v. West, 2014 Ohio 735 (Ohio Ct. App. 2014). “{¶ 45} R.C. 1303.35(A) contains certain defenses to enforcement of notes.”
Taylor v. Uhl, 2014 Ohio 3090 (Ohio Ct. App. 2014).
K One Ltd. P'ship v. Kahn, 2014 Ohio 2079 (Ohio Ct. App. 2014).
— Ohio Rev. Code § 1303.35(A)(1)(c) — 4 cases
CitiMortgage, Inc. v. Hoge, 2011 Ohio 3839 (Ohio Ct. App. 2011). “{¶ 20} R.C. 1303.35(A)(1)(c) provides that fraud is still a valid defense even against a holder in due course.”
Bank of Am. v. Macho, 2011 Ohio 5495 (Ohio Ct. App. 2011). “Therefore, Macho is not prevented from using WaMu’s conduct as a defense against BofA’s claims against her, but she is required to follow the FDIC claims process to assert causes of action against WaMu.”
K One Ltd. P'ship v. Kahn, 2014 Ohio 2079 (Ohio Ct. App. 2014).
JP Morgan Chase Bank, N.A. v. Parker, 2014 Ohio 5806 (Ohio Ct. App. 2014).
— Ohio Rev. Code § 1303.35(A)(2) — 1 case
Deutsche Bank Nat'l Trust Co. v. Pevarski, 932 N.E.2d 887 (Ohio Ct. App. 2010). “Chapter 1303 covers negotiable instruments, and R.C. 1303.35 addresses “[djefenses and claims in recoupment.”
— Ohio Rev. Code § 1303.35(B) — 4 cases
Bank of Am., N.A. v. Pasqualone, 2013 Ohio 5795 (Ohio Ct. App. 2013). “11 The right to payment of a person entitled to enforce the note, who also has the status as a holder in due course, is subject to the defenses of the obligor stated in division (A)(1) of R.C. 1303.35 but is not subject to defenses of the obligor stated in division (A)(2) of R.”
Romano's Carryout, Inc. v. P.F. Chang's China Bistro, Inc., 964 N.E.2d 1102 (Ohio Ct. App. 2011).
Taylor v. Uhl, 2014 Ohio 3090 (Ohio Ct. App. 2014).
Warren v. Hayes (In re Hayes), 33 B.R. 456 (Bankr. S.D. Ohio 1983).
— Ohio Rev. Code § 1303.35(C) — 2 cases
Bank of Am., N.A. v. Pasqualone, 2013 Ohio 5795 (Ohio Ct. App. 2013). “11 The right to payment of a person entitled to enforce the note, who also has the status as a holder in due course, is subject to the defenses of the obligor stated in division (A)(1) of R.C. 1303.35 but is not subject to defenses of the obligor stated in division (A)(2) of R.”
U.S. Bank Natl. Assn. v. Bobo, 2014 Ohio 4975 (Ohio Ct. App. 2014).
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