Staleness as notice of defect or defense

84-8-203. Staleness as notice of defect or defense. After an act or event, other than a call that has been revoked, creating a right to immediate performance of the principal obligation represented by a certificated security or setting a date on or after which the security is to be presented or surrendered for redemption or exchange, a purchaser is charged with notice of any defect in its issue or defense of the issuer, if the act or event: (a) Requires the payment of money, the delivery of a certificated security, the registration of transfer of an uncertificated security, or any of them on presentation or surrender of the security certificate, the money or security is available on the date set for payment or exchange, and the purchaser takes the security more than one year after that date; or (b) is not covered by this section and the purchaser takes the security more than two years after the date set for surrender or presentation or the date on which performance became due. History: L. 1996, ch. 202, § 46; July 1. KANSAS COMMENT, 1996 This section is derived from the former 84-8-203 and has been redrafted to incorporate the exception in former subsection (2) into the second clause of the text of the section. The section is identical to the Official Text except that Kansas has designated subsections with lower case letters rather than arabic numbers. After a security has matured, a purchaser may be charged with notice of defects in its issue or notice of a defense of the issuer even though the security was valid and enforceable initially. Subsections (a) and (b) establish one-year and two-year time periods after which staleness becomes notice. This provision does not apply when the question involves notice of adverse claims of ownership (84-8-105) rather than of the issuer's defenses or defects in the issue. Compare this section with 84-3-304, under which a purchaser of a negotiable instrument has notice that it is overdue if he has reason to know that any part of the principal is overdue, or that he is taking a demand instrument after demand has been made or more than a reasonable length of time after its issue. Ninety days is presumed to be a reasonable time for domestic checks. Revisor's Note: Former section 84-8-203 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.