§4-207-B. Presentment warranties
(1).
If an unaccepted draft is presented to the drawee for payment or acceptance and
the drawee pays or accepts the draft, the person obtaining payment or acceptance,
at the time of presentment, and 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; [1993, c. 293, Pt. B, §26 (NEW).]
(b). The draft has not been altered; [2003, c. 594, §13 (AMD).]
(c). The warrantor has no knowledge that the signature of the purported drawer of the
draft is unauthorized; and [2003, c. 594, §13 (AMD).]
(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 the drawer. [2003, c. 594, §13 (NEW).]
[
2003, c. 594, §13 (AMD)
.]
(2).
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:
(a). Breach of warranty is a defense to the obligation of the acceptor; and [1993, c. 293, Pt. B, §26 (NEW).]
(b). 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. [1993, c. 293, Pt. B, §26 (NEW).]
[
1993, c. 293, Pt. B, §26 (NEW)
.]
(3).
If a drawee asserts a claim for breach of warranty under subsection (1) 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 3-1404 or 3-1405
or the drawer is precluded under section 3-1406 or 4-406 from asserting against the
drawee the unauthorized indorsement or alteration.
[
1993, c. 293, Pt. B, §26 (NEW)
.]
(4).
If a dishonored draft is presented for payment to the drawer or an indorser or 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.
[
1993, c. 293, Pt. B, §26 (NEW)
.]
(5).
The warranties stated in subsections (1) and (4) can not 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 warrantor is discharged to the extent of any loss caused by
the delay in giving notice of the claim.
[
1993, c. 293, Pt. B, §26 (NEW)
.]
(6).
A cause of action for breach of warranty under this section accrues when the claimant
has reason to know of the breach.
[
1993, c. 293, Pt. B, §26 (NEW)
.]
(7).
A demand draft is a check, as provided in section 3-1104, subsection (6).
[
2003, c. 594, §14 (NEW)
.]
(8).
If the warranty in subsection (1), paragraph (d) is not given by a transferor under
applicable conflict of laws rules, then the warranty is not given to the transferor
when that transferor is a transferee.
[
2003, c. 594, §14 (NEW)
.]
SECTION HISTORY
1993, c. 293, §B26 (NEW).
2003, c. 594, §§13,14 (AMD).
