336.4-208 MS 1990 [Renumbered
336.4-208 PRESENTMENT WARRANTIES.
(a) If an unaccepted draft is presented to the drawee for payment or acceptance and the
drawee pays or accepts the draft, (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 that pays or accepts 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;
(3) the warrantor has no knowledge that the signature of the purported drawer of the draft
is unauthorized; and
(4) with respect to any remotely-created item, the person on whose account the item is drawn
authorized the issuance of the item in the amount for which the item is drawn.
(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 (i) breach of warranty is
a defense to the obligation of the acceptor, and (ii) 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 endorsement of the draft or an alteration of the draft, the warrantor may defend
by proving that the endorsement is effective under section
drawer is precluded under section
from asserting against the drawee
the unauthorized endorsement or alteration.
(d) If (i) a dishonored draft is presented for payment to the drawer or an endorser or (ii) 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
(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 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 claim for breach of the warranty in subsection (a)(4) is available against a previous
transferor of the item only to the extent that under applicable law (including the applicable
choice-of-law principle) all previous transferors of the item made the warranty in subsection (a)(4).
History: 1992 c 565 s 90; 2003 c 81 art 2 s 3; 2004 c 162 art 7 s 4