Tennessee Code Annotated

Tenn. Code Ann. § 47-3-305 (2026)

Defenses and claims in recoupment

✓ current as of May 2026

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(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 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 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; 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 (§ 47-3-306) 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, and lack of legal capacity.

Acts 1995, ch. 397, § 2.

Notes of Decisions

Cited in 14 cases (1 in the last 5 years), 1973–2021 · leading case: McConnico v. Third Nat'l Bank in Nashville, 499 S.W.2d 874 (Tenn. 1973).

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McConnico v. Third Nat'l Bank in Nashville, 499 S.W.2d 874 (Tenn. 1973). · cites it 7× “" See, T.C.A. § 47-3-305. That concept is important in the instant case because of the adverse claim asserted by the complainant.”

Cumberland Bank v. G & S IMPLEMENT CO., 211 S.W.3d 223 (Tenn. Ct. App. 2006). · cites it 2× “Tenn.Code Ann. § 47-3-305(a)(2); see also Tenn.”

Lawyers Title Ins. v. United Am. Bank of Memphis, 21 F. Supp. 2d 785 (W.D. Tenn. 1998). · cites it 2× “Under Tenn.Code Ann. § 47-3-305, a holder in due course takes an instrument “free from all claims to it on the part of any person and all defenses of any party except the enumerated ‘real defenses.”

Stringfellow v. First Am. Nat'l Bank, 878 S.W.2d 940 (Tenn. 1994). · cites it 4× “provisions governing the liability of obligors on notes and ordinary checks, codified at Tenn. Code Ann. §§ 47-3-305 and 306. If the “ordinary negotiable instrument” approach were applied to the facts of this case, the analysis would turn upon the fact that under Tenn.”

Bank of Crockett v. Cullipher, 752 S.W.2d 84 (Tenn. Ct. App. 1988). “47-3-408 reads in part as follows: Consideration.”

Metric Partners Growth Suite Investors, L.P. v. Nashville Lodging Co., 989 S.W.2d 700 (Tenn. Ct. App. 1998). · cites it 3× “§ 47-3-305 (a)(3); Howard v. Abernathy, 751 S.”

Guar. Partners v. Huff, 830 S.W.2d 73 (Tenn. Ct. App. 1992). · cites it 2× “Accordingly, we find that the trial court erred as a matter of law when it *77 determined that Guarantor Partners was a “holder in due course under T.C.A. § 47-3-305(2).” We also find equally untenable Guarantor Partners’ argument on appeal that it has the rights of a holder in…”

In Re: Coyita Voncile Thomas, Debtor. Coyita Voncile Thomas v. Money Mart Fin. Servs., Inc., 428 F.3d 735 (8th Cir. 2005). “…§ 3305(a). 6 . Ind.Code Ann. § 26-1-3-305 (repealed 1994) (currently enacted as Ind.Code Ann. § 26-1-3.1-305) and Tenn.Code Ann. § 47-3-305.”

Soloff v. Dollahite, 779 S.W.2d 57 (Tenn. Ct. App. 1989). · cites it 4× “) On the other hand, Tenn.Code Ann. § 47-3-305 (1979) provides that a holder in due course “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 for five…”

Lorine Goodwin Hindman v. Allen Moore & wife, Jackie Moore (Tenn. Ct. App. 2006). · cites it 4× “” Tenn. Code Ann. § 47-3-305 (a)-(b) (2005).”

Harpeth Fin. Servs., LLC v. Jim Clay Pinson, Jr. (Tenn. Ct. App. 2021). · cites it 2× “§§ 47-3-305, -414 (2001)). A “holder in due course” is defined by statute.”

State Resources Corp. v. Thomas E. Talley (Tenn. Ct. App. 2004). · cites it 3× “The primary importance of the concept of holder in due course is with respect to assertion of defenses or claims in recoupment, see T.C.A. § 47-3-305, and of claims to the instrument.”

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— Tenn. Code Ann. § 47-3-305(2) — 2 cases

McConnico v. Third Nat'l Bank in Nashville, 499 S.W.2d 874 (Tenn. 1973). “" See, T.C.A. § 47-3-305. That concept is important in the instant case because of the adverse claim asserted by the complainant.”

Guar. Partners v. Huff, 830 S.W.2d 73 (Tenn. Ct. App. 1992). “Accordingly, we find that the trial court erred as a matter of law when it *77 determined that Guarantor Partners was a “holder in due course under T.C.A. § 47-3-305(2).” We also find equally untenable Guarantor Partners’ argument on appeal that it has the rights of a holder in…”

— Tenn. Code Ann. § 47-3-305(a) — 1 case

State Resources Corp. v. Thomas E. Talley (Tenn. Ct. App. 2004). “The primary importance of the concept of holder in due course is with respect to assertion of defenses or claims in recoupment, see T.C.A. § 47-3-305, and of claims to the instrument.”

— Tenn. Code Ann. § 47-3-305(a)(1)(ii) — 1 case

Lorine Goodwin Hindman v. Allen Moore & wife, Jackie Moore (Tenn. Ct. App. 2006). “” Tenn. Code Ann. § 47-3-305 (a)-(b) (2005).”

— Tenn. Code Ann. § 47-3-305(a)(2) — 1 case

Cumberland Bank v. G & S IMPLEMENT CO., 211 S.W.3d 223 (Tenn. Ct. App. 2006). “Tenn.Code Ann. § 47-3-305(a)(2); see also Tenn.”

— Tenn. Code Ann. § 47-3-305(a)(3) — 1 case

Metric Partners Growth Suite Investors, L.P. v. Nashville Lodging Co., 989 S.W.2d 700 (Tenn. Ct. App. 1998). “§ 47-3-305 (a)(3); Howard v. Abernathy, 751 S.”

— Tenn. Code Ann. § 47-3-305(b) — 1 case

Harpeth Fin. Servs., LLC v. Jim Clay Pinson, Jr. (Tenn. Ct. App. 2021). “§§ 47-3-305, -414 (2001)). A “holder in due course” is defined by statute.”

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