TITLE 6A

Uniform Commercial Code

CHAPTER 6A-3

Negotiable Instruments

PART 6A-3-401

Liability of Parties

SECTION 6A-3-417



   § 6A-3-417  Presentment warranties. –

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

and the drawee pays or accepts the draft, (i) the person obtaining payment or

acceptance, at the time of presentment, and (ii) a previous transferor of the

draft, at the time of transfer, warrant to the drawee making payment or

accepting the draft in good faith that:



   (1) 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;



   (2) The draft has not been altered; and



   (3) The warrantor has no knowledge that the signature of the

drawer of the draft is unauthorized.



   (b) A drawee making payment may recover from any 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, breach of warranty is a defense to the obligation of the acceptor. If

the acceptor makes payment with respect to the draft, the acceptor is entitled

to recover from any 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 § 6A-3-404 or 6A-3-405 or the drawer is

precluded under § 6A-3-406 or 6A-4-406 from asserting against the drawee

the unauthorized indorsement or alteration.



   (d) If (i) a dishonored draft is presented for payment to the

drawer or an indorser or (ii) any other instrument is presented for payment to

a party obliged to pay the instrument, and (iii) payment is received, the

following rules apply:



   (1) The person obtaining payment and a prior transferor of

the instrument warrant to the person making payment in good faith that the

warrantor is, or was, at the time the warrantor transferred the instrument, a

person entitled to enforce the instrument or authorized to obtain payment on

behalf of a person entitled to enforce the instrument.



   (2) 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 30 days after the claimant has reason

to know of the breach and the identity of the warrantor, the liability of the

warrantor under subsection (b) or (d) 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.



History of Section.

(P.L. 2000, ch. 238, § 3; P.L. 2000, ch. 421, § 3.)