§12A-3-302.

§12A-3-302.
   
                            HOLDER IN DUE COURSE
                                      
   (a) Subject to subsection (c) of this section and subsection (d) of
   Section 3-106 of this title, "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 (i) for value, (ii) in good faith,
   (iii) 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, (iv) without
   notice that the instrument contains an unauthorized signature or has
   been altered, (v) without notice of any claim to the instrument
   described in Section 3-306 of this title, and (vi) without notice that
   any party has a defense or claim in recoupment described in subsection
   (a) of Section 3-305 of this title.
   
   (b) Notice of discharge of a party, other than discharge in an
   insolvency proceeding, is not notice of a defense under subsection (a)
   of this section, 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 (i) by legal process or
   by purchase in an execution, bankruptcy, or creditor's sale or similar
   proceeding, (ii) by purchase as part of a bulk transaction not in
   ordinary course of business of the transferor, or (iii) as the
   successor in interest to an estate or other organization.
   
   (d) If, under paragraph (1) of subsection (a) of Section 3-303 of this
   title, 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 (i) the person entitled to enforce an instrument has only a
   security interest in the instrument and (ii) 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.