13 Pa.C.S. Ch. 33

in effect

13 Pa.C.S. § 3301 Person entitled to enforce instrument.

"Person entitled to enforce" an instrument means: (1) the holder of the instrument; (2) a nonholder in possession of the instrument who has the rights of a holder; or (3) a person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 3309 (relating to enforcement of lost, destroyed or stolen instrument) or 3418(d) (relating to payment or acceptance by mistake). A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument. Cross References. Section 3301 is referred to in sections 3103, 3308, 4104 of this title.

13 Pa.C.S. § 3302 Holder in due course.

(a) Definition of "holder in due course".--Subject to subsection (c) and section 3106(d) (relating to unconditional promise or order), "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 3306 (relating to claims to an instrument); and (vi) without notice that any party has a defense or claim in recoupment described in section 3305(a) (relating to defenses and claims in recoupment). (b) Notice of discharge.--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) When one does not acquire rights of holder in due course.--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) Limited right as holder in due course; partial performance.--If, under section 3303(a)(1) (relating to value and consideration), 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) Limited right as holder in due course; security interest.--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) Manner of notice.--To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it. (g) Applicability of other law.--This section is subject to any law limiting status as a holder in due course in particular classes of transactions. Cross References. Section 3302 is referred to in sections 3103, 4104, 4205, 4211, 9102 of this title.

13 Pa.C.S. § 3303 Value and consideration.

(a) Value.--An instrument is issued or transferred for value if: (1) the instrument is issued or transferred for a promise of performance, to the extent the promise has been performed; (2) the transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding; (3) the instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due; (4) the instrument is issued or transferred in exchange for a negotiable instrument; or (5) the instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument. (b) Definition of "consideration".--"Consideration" means any consideration sufficient to support a simple contract. The drawer or maker of an instrument has a defense if the instrument is issued without consideration. If an instrument is issued for a promise of performance, the issuer has a defense to the extent performance of the promise is due and the promise has not been performed. If an instrument is issued for value as stated in subsection (a), the instrument is also issued for consideration. Cross References. Section 3303 is referred to in sections 3103, 3302, 5102, 9403, 12102 of this title.

13 Pa.C.S. § 3304 Overdue instrument.

(a) Instrument payable on demand.--An instrument payable on demand becomes overdue at the earliest of the following times: (1) on the day after the day demand for payment is duly made; (2) if the instrument is a check, 90 days after its date; or (3) if the instrument is not a check, when the instrument has been outstanding for a period of time after its date which is unreasonably long under the circumstances of the particular case in light of the nature of the instrument and usage of the trade. (b) Instrument payable at a definite time.--With respect to an instrument payable at a definite time, the following rules apply: (1) If the principal is payable in installments and a due date has not been accelerated, the instrument becomes overdue upon default under the instrument for nonpayment of an installment, and the instrument remains overdue until the default is cured. (2) If the principal is not payable in installments and the due date has not been accelerated, the instrument becomes overdue on the day after the due date. (3) If a due date with respect to principal has been accelerated, the instrument becomes overdue on the day after the accelerated due date. (c) Instrument not overdue if default in payment of interest.--Unless the due date of principal has been accelerated, an instrument does not become overdue if there is default in payment of interest but no default in payment of principal.

13 Pa.C.S. § 3305 Defenses and claims in recoupment.

(a) General rule.--Except as stated in subsection (b), 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 division 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) Right of holder in due course to enforce obligation.--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 subsection (a)(1), but is not subject to defenses of the obligor stated in subsection (a)(2) or claims in recoupment stated in subsection (a)(3) against a person other than the holder. (c) Claims and defenses of person other than obligor on instrument.--Except as stated in subsection (d), 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 3306) 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) Instrument signed for accommodation.--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) 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. Cross References. Section 3305 is referred to in sections 3302, 4207, 9403 of this title.

13 Pa.C.S. § 3306 Claims to an instrument.

A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument. Cross References. Section 3306 is referred to in sections 3302, 3305, 3602 of this title.

13 Pa.C.S. § 3307 Notice of breach of fiduciary duty.

(a) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection: "Fiduciary." An agent, trustee, partner, corporate officer or director or other representative owing a fiduciary duty with respect to an instrument. "Represented person." The principal, beneficiary, partnership, corporation or other person to whom the duty stated under the definition of fiduciary is owed. (b) General rule.--If an instrument is taken from a fiduciary for payment or collection or for value, the taker has knowledge of the fiduciary status of the fiduciary and the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply: (1) Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person. (2) In the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is: (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary; (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary; or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person. (3) If an instrument is issued by the represented person or the fiduciary as such and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty. (4) If an instrument is issued by the represented person or the fiduciary as such to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is: (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary; (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary; or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person. Cross References. Section 3307 is referred to in section 3206 of this title.

13 Pa.C.S. § 3308 Proof of signatures and status as holder in due course.

(a) Proof of signatures.--In an action with respect to an instrument, the authenticity of, and authority to make, each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on the person claiming validity, but the signature is presumed to be authentic and authorized unless the action is to enforce the liability of the purported signer and the signer is dead or incompetent at the time of trial of the issue of validity of the signature. If an action to enforce the instrument is brought against a person as the undisclosed principal of a person who signed the instrument as a party to the instrument, the plaintiff has the burden of establishing that the defendant is liable on the instrument as a represented person under section 3402(a) (relating to signature by representative). (b) Status as holder in due course.--If the validity of signatures is admitted or proved and there is compliance with subsection (a), a plaintiff producing the instrument is entitled to payment if the plaintiff proves entitlement to enforce the instrument under section 3301 (relating to person entitled to enforce instrument), unless the defendant proves a defense or claim in recoupment. If a defense or claim in recoupment is proved, the right to payment of the plaintiff is subject to the defense or claim, except to the extent the plaintiff proves that the plaintiff has rights of a holder in due course which are not subject to the defense or claim. Cross References. Section 3308 is referred to in section 3309 of this title.

13 Pa.C.S. § 3309 Enforcement of lost, destroyed or stolen instrument.

(a) Enforcement.--A person not in possession of an instrument is entitled to enforce the instrument if: (1) the person was in possession of the instrument and entitled to enforce it when loss of possession occurred; (2) the loss of possession was not the result of a transfer by the person or a lawful seizure; and (3) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process. (b) Proof.--A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person's right to enforce the instrument. If that proof is made, section 3308 (relating to proof of signatures and status as holder in due course) applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means. Cross References. Section 3309 is referred to in sections 3301, 3312 of this title.

13 Pa.C.S. § 3310 Effect of instrument on obligation for which taken.

(a) Certified check, cashier's check or teller's check given in payment of obligation.--Unless otherwise agreed, if a certified check, cashier's check or teller's check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation. Discharge of the obligation does not affect any liability that the obligor may have as an indorser of the instrument. (b) Note or uncertified check taken for obligation.--Unless otherwise agreed and except as provided in subsection (a), if a note or an uncertified check is taken for an obligation, the obligation is suspended to the same extent the obligation would be discharged if an amount of money equal to the amount of the instrument were taken, and the following rules apply: (1) In the case of an uncertified check, suspension of the obligation continues until dishonor of the check or until it is paid or certified. Payment or certification of the check results in discharge of the obligation to the extent of the amount of the check. (2) In the case of a note, suspension of the obligation continues until dishonor of the note or until it is paid. Payment of the note results in discharge of the obligation to the extent of the payment. (3) Except as provided in paragraph (4), if the check or note is dishonored and the obligee of the obligation for which the instrument was taken is the person entitled to enforce the instrument, the obligee may enforce either the instrument or the obligation. In the case of an instrument of a third person which is negotiated to the obligee by the obligor, discharge of the obligor on the instrument also discharges the obligation. (4) If the person entitled to enforce the instrument taken for an obligation is a person other than the obligee, the obligee may not enforce the obligation to the extent the obligation is suspended. If the obligee is the person entitled to enforce the instrument but no longer has possession of it because it was lost, stolen or destroyed, the obligation may not be enforced to the extent of the amount payable on the instrument, and to that extent the obligee's rights against the obligor are limited to enforcement of the instrument. (c) Other instruments taken for obligation.--If an instrument other than one described in subsection (a) or (b) is taken for an obligation, the effect is: (1) that stated in subsection (a) if the instrument is one on which a bank is liable as maker or acceptor; or (2) that stated in subsection (b) in any other case. Cross References. Section 3310 is referred to in section 2511 of this title.

13 Pa.C.S. § 3311 Accord and satisfaction by use of instrument.

(a) Requirements.--If a person against whom a claim is asserted proves that: (1) that person in good faith tendered an instrument to the claimant as full satisfaction of the claim; (2) the amount of the claim was unliquidated or subject to a bona fide dispute; and (3) the claimant obtained payment of the instrument; the following subsections apply. (b) Proof of conspicuous statement.--Unless subsection (c) applies, the claim is discharged if the person against whom the claim is asserted proves that the instrument or an accompanying written communication contained a conspicuous statement to the effect that the instrument was tendered as full satisfaction of the claim. (c) Designated person, office or place and 90-day limitations.--Subject to subsection (d), a claim is not discharged under subsection (b) if either of the following applies: (1) The claimant, if an organization, proves that: (i) within a reasonable time before the tender, the claimant sent a conspicuous statement to the person against whom the claim is asserted that communications concerning disputed debts, including an instrument tendered as full satisfaction of a debt, are to be sent to a designated person, office or place; and (ii) the instrument or accompanying communication was not received by that designated person, office or place. (2) The claimant, whether or not an organization, proves that within 90 days after payment of the instrument, the claimant tendered repayment of the amount of the instrument to the person against whom the claim is asserted. This paragraph does not apply if the claimant is an organization that sent a statement complying with paragraph (1)(i). (d) Discharge.--A claim is discharged if the person against whom the claim is asserted proves that within a reasonable time before collection of the instrument was initiated, the claimant, or an agent of the claimant having direct responsibility with respect to the disputed obligation, knew that the instrument was tendered in full satisfaction of the claim.

13 Pa.C.S. § 3312 Lost, destroyed or stolen cashier's check, teller's check or certified check.

(a) Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection: "Check." A cashier's check, teller's check or certified check. "Claimant." A person who claims the right to receive the amount of a cashier's check, teller's check or certified check that was lost, destroyed or stolen. "Declaration of loss." A written statement made under penalty of perjury to the effect that: (1) the declarer lost possession of a check; (2) the declarer is the drawer or payee of the check, in the case of a certified check, or the remitter or payee of the check, in the case of a cashier's check or teller's check; (3) the loss of possession was not the result of a transfer by the declarer or a lawful seizure; and (4) the declarer cannot reasonably obtain possession of the check because the check was destroyed, its whereabouts cannot be determined or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process. "Obligated bank." The issuer of a cashier's check or teller's check or the acceptor of a certified check. (b) Claims.-- (1) A claimant may assert a claim to the amount of a check by a communication to the obligated bank describing the check with reasonable certainty and requesting payment of the amount of the check if: (i) the claimant is the drawer or payee of a certified check or remitter or payee of a cashier's check or teller's check; (ii) the communication contains or is accompanied by a declaration of loss of the claimant with respect to the check; (iii) the communication is received at a time and in a manner affording the bank a reasonable time to act on it before the check is paid; and (iv) the claimant provides reasonable identification if requested by the obligated bank. Delivery of a declaration of loss is a warranty of the truth of the statements made in the declaration. (2) If a claim is asserted in compliance with this subsection, the following rules apply: (i) The claim becomes enforceable at the later of: (A) the time the claim is asserted; or (B) the 90th day following the date of the check, in the case of a cashier's check or teller's check, or the 90th day following the date of the acceptance, in the case of a certified check. (ii) Until the claim becomes enforceable, it has no legal effect and the obligated bank may pay the check or, in the case of a teller's check, may permit the drawee to pay the check. Payment to a person entitled to enforce the check discharges all liability of the obligated bank with respect to the check. (iii) If the claim becomes enforceable before the check is presented for payment, the obligated bank is not obliged to pay the check. (iv) When the claim becomes enforceable, the obligated bank becomes obliged to pay the amount of the check to the claimant if payment of the check has not been made to a person entitled to enforce the check. Subject to section 4302(a)(1) (relating to responsibility of payor bank for late return of item), payment to the claimant discharges all liability of the obligated bank with respect to the check. (c) Claimant obligation.--If the obligated bank pays the amount of a check to a claimant under subsection (b)(2)(iv) and the check is presented for payment by a person having rights of a holder in due course, the claimant is obliged to: (1) refund the payment to the obligated bank if the check is paid; or (2) pay the amount of the check to the person having rights of a holder in due course if the check is dishonored. (d) Claimant remedies.--If a claimant has the right to assert a claim under subsection (b) and is also a person entitled to enforce a cashier's check, teller's check or certified check which is lost, destroyed or stolen, the claimant may assert rights with respect to the check either under this section or section 3309 (relating to enforcement of lost, destroyed or stolen instrument). (May 22, 1996, P.L.248, No.44, eff. 180 days) 1996 Amendment. Act 44 added section 3312.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.palegis.us/statutes/consolidated/view-statute?txtType=HTM&ttl=13Fetched: 10/16/2026