§12A-3-305.

§12A-3-305.
   
                     DEFENSES AND CLAIMS IN RECOUPMENT
                                      
   (a) Except as stated in subsection (b) of this section, 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 article
   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 paragraph (1) of subsection (a) of this section, but is not
   subject to defenses of the obligor stated in paragraph (2) of
   subsection (a) of this section or claims in recoupment stated in
   paragraph (3) of subsection (a) of this section against a person other
   than the holder.
   
   (c) Except as stated in subsection (d) of this section, 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
   (Section 3-306 of this title) 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) of this section 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.