Utah Code
Utah Code § 70A-3-302 (2026)
Holder in due course
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Subject to Subsection (3) and Subsection 70A-3-106(4), "holder in due course" means the holder of an instrument if:
the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
the holder took the instrument for value, in good faith, without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, without notice that the instrument contains an unauthorized signature or has been altered, without notice of any claim to the instrument described in Section 70A-3-306, and without notice that any party has a defense or claim in recoupment described in Subsection 70A-3-305(1).
Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under Subsection (1), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.
Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken:
by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding;
by purchase as part of a bulk transaction not in ordinary course of business of the transferor; or
as the successor in interest to an estate or other organization.
If, under Subsection 70A-3-303(1)(a), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.
If the person entitled to enforce an instrument has only a security interest in the instrument, and the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.
To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.
This section is subject to any law limiting status as a holder in due course in particular classes of transactions.
Repealed and Re-enacted by Chapter 237, 1993 General Session
Notes of Decisions
Cited in 4
cases, 1972–1993 · leading case: Howick v. Bank of Salt Lake, 498 P.2d 352 (Utah 1972).
Howick v. Bank of Salt Lake, 498 P.2d 352 (Utah 1972). “I concur in the result of the majority opinion that this matter must be remanded to the trial court; however, I believe the relevant issue to be tried is whether plaintiff was a holder in due course, as provided in Section 70A-3-302(1), U.C.A. 1953. The certificate of deposit,…”
Neve Welch Enter., Inc. v. United Bank, 628 P.2d 1295 (Utah 1981). “Section 70A-3-302, Utah Code Ann. (1953), as amended, defines a holder in due course as one who takes a negotiable instrument: (a) for value; and (b) in good faith; and (c) without notice that it is overdue or has been dishonored or of any defense against or claim to it on the…”
First Fed. Sav. & Loan Ass'n of Salt Lake City v. Gump & Ayers Real Est., Inc., 771 P.2d 1096 (Utah Ct. App. 1989). “First, it claims First Federal had notice that Air Terminal’s obligation was voidable in whole or in part under Utah Code Ann. § 70A-3-304(1)(b) (1988). Second, Air Terminal claims First Federal had notice of a claim against the note under Utah Code Ann.”
WKB Enter., Inc. v. Ruan Leasing Co., 838 F. Supp. 529 (D. Utah 1993). “§ 70A-5-114(2) provides that in the situation where fraud is part of the transaction a bank is not compelled to pay unless the holder of the draft or demand is a holder in due course under § 70A-3-302, a bona fide purchaser of a certified security under § 70A-8-302, or is a…”
Utah Code § 70A-3-302(1): 1 case
Howick v. Bank of Salt Lake, 498 P.2d 352 (Utah 1972). “I concur in the result of the majority opinion that this matter must be remanded to the trial court; however, I believe the relevant issue to be tried is whether plaintiff was a holder in due course, as provided in Section 70A-3-302(1), U.C.A. 1953. The certificate of deposit,…”
Utah Code § 70A-3-302(1)(c): 1 case
First Fed. Sav. & Loan Ass'n of Salt Lake City v. Gump & Ayers Real Est., Inc., 771 P.2d 1096 (Utah Ct. App. 1989). “First, it claims First Federal had notice that Air Terminal’s obligation was voidable in whole or in part under Utah Code Ann. § 70A-3-304(1)(b) (1988). Second, Air Terminal claims First Federal had notice of a claim against the note under Utah Code Ann.”
Utah Code § 70A-3-302(l): 1 case
Howick v. Bank of Salt Lake, 498 P.2d 352 (Utah 1972). “I concur in the result of the majority opinion that this matter must be remanded to the trial court; however, I believe the relevant issue to be tried is whether plaintiff was a holder in due course, as provided in Section 70A-3-302(1), U.C.A. 1953. The certificate of deposit,…”
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