16a-5-202. (UCCC) Refunds and penalties as setoff to obligation. Refunds or penalties to which the consumer is entitled pursuant to this part may be set off against the consumer's obligation, and may be raised as a defense to a suit on the obligation without regard to the time limitations prescribed by this part.
History: L. 1973, ch. 85, ยง 90; January 1, 1974.
KANSAS COMMENT, 2000
As noted in the Kansas comment to the preceding section, this section permits a consumer to set off damages or penalties to which the consumer may be entitled against the consumer's obligation, without regard to the time limitations prescribed by other sections in this part. The policy of this section was stated in Valley View State Bank v. Caulfield, 11 Kan. App. 2d 601, 731 P.2d 316 (1987), as follows: "Without 16a-5-202, a creditor who had committed a violation could wait one year under the closed end contract, and two years under open end credit, and commence an action and not be concerned with any violations." 631 P.2d at 318. In Caulfield, the court also held that the term "obligation," as used in this section, refers only to the note or contract on which suit is brought, and not to prior notes which were consolidated or renewed into the current note. As a result, violations which had occurred in the prior notes and which were now time-barred could not be raised.
CASE ANNOTATIONS
1. Obligation refers to note or contract on which suit brought; prior notes not included. Valley View State Bank v. Caulfield, 11 Kan. App. 2d 601, 602, 731 P.2d 316 (1987).
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