DEFENSES AND CLAIMS IN RECOUPMENT (a) Except as otherwise provided in this section, 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 other 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 paragraph (1) of subsection (a) of this section, but is not subject to defenses of the obligor stated in paragraph (2) of subsection (a) of this section or claims in recoupment stated in paragraph (3) of subsection (a) of this section against a person other than the holder. (c) Except as stated in subsection (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, claim in recoupment, or claim to the instrument (Section 3-306 of this title) 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) 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) This section is subject to law other than this article that establishes a different rule for consumer transactions. Added by Laws 1961, p. 109, § 3-305. Amended by Laws 1991, c. 117, § 56, eff. Jan. 1, 1992; Laws 2009, c. 208, § 6, eff. Nov. 1, 2009. NOTE: Laws 2008, c. 382, § 6 was held unconstitutional by the Oklahoma Supreme Court in the case of Weddington v. Henry, 202 P.3d 143, 2008 OK 102 (2009) and repealed by Laws 2009, c. 208, § 22, eff. Nov. 1, 2009.
Notes of Decisions
Sunrizon Homes, Inc. v. Am. Guar. Inv. Corp., 782 P.2d 103 (Okla. 1989).
· cites it 2× “1981 § 3-305 provides: "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 holder has not dealt except (a) infancy, to the…”
First Nat'l Bank v. Duncan Sav. & Loan Ass'n, 656 F. Supp. 358 (W.D. Okla. 1987).
“12A, § 3-305, the parties focus much of their argument on Plaintiff’s status, Plaintiff naturally asserting that it is a holder in due course and Defendant urging that Plaintiff is a mere holder. The Court, however, finds it unnecessary to ascertain whether Plaintiff is a holder…”
Peoples Bank of Aurora v. Haar, 421 P.2d 817 (Okla. 1966).
“If it is, then it is entitled to recovery because 12A O.S.1961, § 3-305 provides that a holder in due course takes an instrument free from all defenses of any party to the instrument with whom the holder has not dealt.”
Friendly Nat'l Bank of Sw. Oklahoma City v. Farmers Ins. Grp., 630 P.2d 318 (Okla. 1981).
“If it is, then it is entitled to recovery because 12A O.S.1961, § 3-305 provides that a holder in due course takes an instrument free from all defenses of any party to the instrument with whom the holder has not dealt.”
Union Bank & Trust Co. v. Polkinghorne, 801 P.2d 735 (Okla. Civ. App. 1990).
· cites it 2× “12A O.S. § 3-305. A bank/holder gives "value" to the extent credit has been given for the instrument, or to the extent bank has acquired a security interest in the instrument.”
Chess v. Romine (W.D. Okla. 2019).
· cites it 2× “Initially, the court rejects defendants’ argument that plaintiffs cannot rely upon their fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity…”
The Striker Grp. LLC v. Drawdy (W.D. Okla. 2019).
· cites it 2× “Initially, the court rejects Striker’s argument that Drawdy cannot rely upon her fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to…”
Striker Entities LLC v. Callander (W.D. Okla. 2019).
· cites it 2× “Initially, the court rejects Striker’s argument that Callander cannot rely upon his fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to…”
Striker Grp. LLC The v. Drawdy (W.D. Okla. 2019).
· cites it 2× “) The evidentiary record, even viewed in a light most favorable to Drawdy, does not show that Drawdy’s tax deductions are not valid.”
The Striker Grp. LLC v. Chess (W.D. Okla. 2019).
“” 12A O.S. 2011 § 3-305(a)(2). In Oklahoma, fraudulent inducement is a defense to a simple contract.”
Okla. Stat. tit. 12A, § 3-305(a)(1): 4 cases
Chess v. Romine (W.D. Okla. 2019).
“Initially, the court rejects defendants’ argument that plaintiffs cannot rely upon their fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity…”
The Striker Grp. LLC v. Drawdy (W.D. Okla. 2019).
“Initially, the court rejects Striker’s argument that Drawdy cannot rely upon her fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to…”
Striker Entities LLC v. Callander (W.D. Okla. 2019).
“Initially, the court rejects Striker’s argument that Callander cannot rely upon his fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to…”
Striker Grp. LLC The v. Drawdy (W.D. Okla. 2019).
“) The evidentiary record, even viewed in a light most favorable to Drawdy, does not show that Drawdy’s tax deductions are not valid.”
Okla. Stat. tit. 12A, § 3-305(a)(2): 4 cases
The Striker Grp. LLC v. Drawdy (W.D. Okla. 2019).
“Initially, the court rejects Striker’s argument that Drawdy cannot rely upon her fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to…”
The Striker Grp. LLC v. Chess (W.D. Okla. 2019).
“” 12A O.S. 2011 § 3-305(a)(2). In Oklahoma, fraudulent inducement is a defense to a simple contract.”
Striker Entities LLC v. Callander (W.D. Okla. 2019).
“Initially, the court rejects Striker’s argument that Callander cannot rely upon his fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity to…”
Striker Grp. LLC The v. Drawdy (W.D. Okla. 2019).
“) The evidentiary record, even viewed in a light most favorable to Drawdy, does not show that Drawdy’s tax deductions are not valid.”
Okla. Stat. tit. 12A, § 3-305(b): 1 case
Chess v. Romine (W.D. Okla. 2019).
“Initially, the court rejects defendants’ argument that plaintiffs cannot rely upon their fraudulent inducement defense because 12A O.S. § 3-305(a)(1) only allows a defense of “fraud that induced the obligor to sign the instrument with neither knowledge nor reasonable opportunity…”
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