§490:4-208  Presentment warranties. 

(a)  If an unaccepted draft is presented to the drawee for payment or

acceptance and the drawee pays or accepts the draft:

     (1)  The person obtaining payment or acceptance, at

the time of presentment; and

     (2)  A previous transferor of the draft, at the time

of transfer, warrant to the drawee that pays or accepts the draft in good faith

that:

         (A)  The warrantor is, or was, at the time the

warrantor transferred the draft, a person entitled to enforce the draft or

authorized to obtain payment or acceptance of the draft on behalf of a person

entitled to enforce the draft;

         (B)  The draft has not been altered;

         (C)  The warrantor has no knowledge that the

signature of the purported drawer of the draft is unauthorized; and

         (D)  If the draft is a demand draft, creation

of the demand draft according to the terms on its face was authorized by the

person identified as drawer.

     (b)  A drawee making payment may recover from a

warrantor damages for breach of warranty equal to the amount paid by the drawee

less the amount the drawee received or is entitled to receive from the drawer

because of the payment.  In addition, the drawee is entitled to compensation

for expenses and loss of interest resulting from the breach.  The right of the

drawee to recover damages under this subsection is not affected by any failure

of the drawee to exercise ordinary care in making payment.  If the drawee

accepts the draft:

     (1)  Breach of warranty is a defense to the obligation

of the acceptor; and

     (2)  If the acceptor makes payment with respect to the

draft, the acceptor is entitled to recover from a warrantor for breach of

warranty the amounts stated in this subsection.

     (c)  If a drawee asserts a claim for breach of

warranty under subsection (a) based on an unauthorized indorsement of the draft

or an alteration of the draft, the warrantor may defend by proving that the

indorsement is effective under section 490:3-404 or 490:3-405 or the drawer is

precluded under section 490:3-406 or 490:4-406 from asserting against the

drawee the unauthorized indorsement or alteration.

     (d)  If:

     (1)  A dishonored draft is presented for payment to

the drawer or an indorser; or

     (2)  Any other item is presented for payment to a

party obliged to pay the item, and the item is paid, the person obtaining

payment and a prior transferor of the item warrant to the person making payment

in good faith that the warrantor is, or was, at the time the warrantor

transferred the item, a person entitled to enforce the item or authorized to obtain

payment on behalf of a person entitled to enforce the item.  The person making

payment may recover from any warrantor for breach of warranty an amount equal

to the amount paid plus expenses and loss of interest resulting from the

breach.

     (e)  The warranties stated in subsections (a)

and (d) cannot be disclaimed with respect to checks.  Unless notice of a claim

for breach of warranty is given to the warrantor within thirty days after the

claimant has reason to know of the breach and the identity of the warrantor,

the warrantor is discharged to the extent of any loss caused by the delay in

giving notice of the claim.

     (f)  A cause of action for breach of warranty

under this section accrues when the claimant has reason to know of the breach.

     (g)  A demand check is a check, as provided in

section 490:3-104(f). [L 1991, c 118, pt of §4; am L 1998, c 241, §6]

 

Note

 

  This section is new.  Former §490:4-208 renumbered as

§490:4-210.