(2) The following rules apply if an issuer asserts that a security is not valid:
(a) A security other than one issued by a government or governmental subdivision, agency or instrumentality, even though issued with a defect going to its validity, is valid in the hands of a purchaser for value and without notice of the particular defect unless the defect involves a violation of a constitutional provision. In that case, the security is valid in the hands of a purchaser for value and without notice of the defect, other than one who takes by original issue.
(b) Paragraph (a) of this subsection applies to an issuer that is a government or governmental subdivision, agency or instrumentality only if there has been substantial compliance with the legal requirements governing the issue or the issuer has received a substantial consideration for the issue as a whole or for the particular security and a stated purpose of the issue is one for which the issuer has power to borrow money or issue the security.
(3) Except as otherwise provided in ORS 78.2050, lack of genuineness of a certificated security is a complete defense, even against a purchaser for value and without notice.
(4) All other defenses of the issuer of a security, including nondelivery and conditional delivery of a certificated security, are ineffective against a purchaser for value who has taken the certificated security without notice of the particular defense.
(5) This section does not affect the right of a party to cancel a contract for a security "when, as and if issued" or "when distributed" in the event of a material change in the character of the security that is the subject of the contract or in the plan or arrangement pursuant to which the security is to be issued or distributed.
(6) If a security is held by a securities intermediary against whom an entitlement holder has a security entitlement with respect to the security, the issuer may not assert any defense that the issuer could not assert if the entitlement holder held the security directly. [1961 c.726 §78.2020; 1985 c.676 §78.2020; 1995 c.328 §18]
Structure 2021 Oregon Revised Statutes
Volume : 02 - Business Organizations, Commercial Code
Chapter 078 - Investment Securities
Section 78.1020 - Definitions and index of definitions.
Section 78.1040 - Acquisition of security or financial asset or interest therein.
Section 78.1050 - Notice of adverse claim.
Section 78.1070 - Whether indorsement, instruction or entitlement order is effective.
Section 78.1080 - Warranties in direct holding.
Section 78.1090 - Warranties in indirect holding.
Section 78.1100 - Applicability; choice of law.
Section 78.1110 - Clearing corporation rules.
Section 78.1120 - Creditor’s legal process.
Section 78.1140 - Evidentiary rules concerning certificated securities.
Section 78.1150 - Securities intermediary and others not liable to adverse claimant.
Section 78.2030 - Staleness as notice of defects or defenses.
Section 78.2040 - Effect of issuer’s restriction on transfer.
Section 78.2050 - Effect of unauthorized signature on security certificate.
Section 78.2060 - Completion or alteration of security certificate.
Section 78.2070 - Rights of issuer with respect to registered owners.
Section 78.2080 - Effect of signature of authenticating trustee, registrar or transfer agent.
Section 78.3020 - Rights of purchaser.
Section 78.3030 - "Protected purchaser."
Section 78.3040 - Indorsement.
Section 78.3050 - Instruction.
Section 78.3060 - Effect of guaranteeing signature, indorsement or instruction.
Section 78.4010 - Duty of issuer to register transfer.
Section 78.4020 - Assurance that indorsement or instruction is effective.
Section 78.4030 - Demand that issuer not register transfer.
Section 78.4040 - Wrongful registration.
Section 78.4050 - Replacement of lost, destroyed or wrongfully taken security certificate.
Section 78.5040 - Duty of securities intermediary to maintain financial asset.
Section 78.5050 - Duty of securities intermediary with respect to payments and distributions.
Section 78.5070 - Duty of securities intermediary to comply with entitlement order.
Section 78.5100 - Rights of purchaser of security entitlement from entitlement holder.
Section 78.5110 - Priority among security interests and entitlement holders.