Section 3--304. Notice to Purchaser.

(1) The purchaser has notice of a claim or defense if

(a) the instrument is so incomplete, bears such visible evidence

of forgery or alteration, or is otherwise so irregular as to

call into question its validity, terms or ownership or to

create an ambiguity as to the party to pay; or

(b) the purchaser has notice that the obligation of any party is

voidable in whole or in part, or that all parties have been

discharged.

(2) The purchaser has notice of a claim against the instrument when he
has knowledge that a fiduciary has negotiated the instrument in payment
of or as security for his own debt or in any transaction for his own
benefit or otherwise in breach of duty.

(3) The purchaser has notice that an instrument is overdue if he has
reason to know

(a) that any part of the principal amount is overdue or that

there is an uncured default in payment of another instrument

of the same series; or

(b) that acceleration of the instrument has been made; or

(c) that he is taking a demand instrument after demand has been

made or more than a reasonable length of time after its

issue. A reasonable time for a check drawn and payable within

the states and territories of the United States and the

District of Columbia is presumed to be thirty days.

(4) Knowledge of the following facts does not of itself give the
purchaser notice of a defense or claim

(a) that the instrument is antedated or postdated;

(b) that it was issued or negotiated in return for an executory

promise or accompanied by a separate agreement, unless the

purchaser has notice that a defense or claim has arisen from

the terms thereof;

(c) that any party has signed for accommodation;

(d) that an incomplete instrument has been completed, unless the

purchaser has notice of any improper completion;

(e) that any person negotiating the instrument is or was a

fiduciary;

(f) that there has been default in payment of interest on the

instrument or in payment of any other instrument, except one

of the same series.

(5) The filing or recording of a document does not of itself
constitute notice within the provisions of this Article to a person who
would otherwise be a holder in due course.

(6) To be effective notice must be received at such time and in such
manner as to give a reasonable opportunity to act on it.

(7) In any event, to constitute notice of a claim or defense, the
purchaser must have knowledge of the claim or defense or knowledge of
such facts that his action in taking the instrument amounts to bad
faith.