Indiana Code
Chapter 3.1. Negotiable Instruments
26-1-3.1-302. Holder in Due Course

Sec. 302. (a) Subject to subsection (c) and IC 26-1-3.1-106(d), "holder in due course" means the holder of an instrument if:
(1) 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
(2) the holder took the instrument:
(A) for value;
(B) in good faith;
(C) 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;
(D) without notice that the instrument contains an unauthorized signature or has been altered;
(E) without notice of any claim to the instrument described in IC 26-1-3.1-306; and
(F) without notice that any party has a defense or claim in recoupment described in IC 26-1-3.1-305(a).
(b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), 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.
(c) 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:
(1) by legal process or by purchase in an execution, bankruptcy, or creditor's sale or similar proceeding;
(2) by purchase as part of a bulk transaction not in ordinary course of business of the transferor; or
(3) as the successor in interest to an estate or other organization.
(d) If, under IC 26-1-3.1-303(a)(1), 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.
(e) If:
(1) the person entitled to enforce an instrument has only a security interest in the instrument; and
(2) 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.
(f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.
(g) This section is subject to any law limiting status as a holder in due course in particular classes of transactions.
As added by P.L.222-1993, SEC.5.

Structure Indiana Code

Indiana Code

Title 26. Commercial Law

Article 1. Uniform Commercial Code

Chapter 3.1. Negotiable Instruments

26-1-3.1-101. Short Title

26-1-3.1-102. Subject Matter

26-1-3.1-103. Definitions

26-1-3.1-104. Negotiable Instrument

26-1-3.1-105. Issue of Instrument

26-1-3.1-106. Unconditional Promise or Order

26-1-3.1-107. Instrument Payable in Foreign Money

26-1-3.1-108. Payable on Demand or at Definite Time

26-1-3.1-109. Payable to Bearer or to Order

26-1-3.1-110. Identification of Person to Whom Instrument Is Payable

26-1-3.1-111. Place of Payment

26-1-3.1-112. Interest

26-1-3.1-113. Date of Instrument

26-1-3.1-114. Contradictory Terms of Instrument

26-1-3.1-115. Incomplete Instrument

26-1-3.1-116. Joint and Several Liability; Contribution

26-1-3.1-117. Other Agreements Affecting Instrument

26-1-3.1-118. Statute of Limitations

26-1-3.1-119. Notice of Right to Defend Action

26-1-3.1-201. Negotiation

26-1-3.1-202. Negotiation Subject to Rescission

26-1-3.1-203. Transfer of Instrument; Rights Acquired by Transfer

26-1-3.1-204. Endorsement

26-1-3.1-205. Special Endorsement; Blank Endorsement; Anomalous Endorsement

26-1-3.1-206. Restrictive Endorsement

26-1-3.1-207. Reacquisition

26-1-3.1-301. Person Entitled to Enforce Instrument

26-1-3.1-302. Holder in Due Course

26-1-3.1-303. Value and Consideration

26-1-3.1-304. Overdue Instrument

26-1-3.1-305. Defenses and Claims in Recoupment

26-1-3.1-306. Claims to an Instrument

26-1-3.1-307. Notice of Breach of Fiduciary Duty

26-1-3.1-308. Proof of Signatures and Status as Holder in Due Course

26-1-3.1-309. Enforcement of Lost, Destroyed, or Stolen Instrument

26-1-3.1-310. Effect of Instrument on Obligation for Which Taken

26-1-3.1-311. Accord and Satisfaction by Use of Instrument

26-1-3.1-312. Lost Check; Assertion of Claim to Obligated Bank

26-1-3.1-401. Signature

26-1-3.1-402. Signature by Representative

26-1-3.1-403. Unauthorized Signature

26-1-3.1-404. Impostors; Fictitious Payees

26-1-3.1-405. Employer's Responsibility for Fraudulent Endorsement by Employee

26-1-3.1-406. Negligence Contributing to Forged Signature or Alteration of Instrument

26-1-3.1-407. Alteration

26-1-3.1-408. Drawee Not Liable on Unaccepted Draft

26-1-3.1-409. Acceptance of Draft; Certified Check

26-1-3.1-410. Acceptance Varying Draft

26-1-3.1-411. Refusal to Pay Cashier's Checks, Teller's Checks, and Certified Checks

26-1-3.1-412. Obligation of Issuer of Note or Cashier's Check

26-1-3.1-413. Obligation of Acceptor

26-1-3.1-414. Obligation of Drawer

26-1-3.1-415. Obligation of Endorser

26-1-3.1-416. Transfer Warranties

26-1-3.1-417. Presentment Warranties

26-1-3.1-418. Payment or Acceptance by Mistake

26-1-3.1-419. Instruments Signed for Accommodation

26-1-3.1-420. Conversion of Instrument

26-1-3.1-501. Presentment

26-1-3.1-502. Dishonor

26-1-3.1-502.5. Surcharge After Dishonor

26-1-3.1-503. Notice of Dishonor

26-1-3.1-504. Excused Presentment and Notice of Dishonor

26-1-3.1-505. Evidence of Dishonor

26-1-3.1-601. Discharge and Effect of Discharge

26-1-3.1-602. Payment

26-1-3.1-603. Tender of Payment

26-1-3.1-604. Discharge by Cancellation or Renunciation

26-1-3.1-605. Release or Extension of an Obligor's Obligation