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Minnesota Legislature

Office of the Revisor of Statutes

336.3-416 MS 1990 [Repealed, 1992 c 565 s 114]
336.3-416 TRANSFER WARRANTIES.
(a) A person who transfers an instrument for consideration warrants to the transferee and, if
the transfer is by endorsement, to any subsequent transferee that:
(1) the warrantor is a person entitled to enforce the instrument;
(2) all signatures on the instrument are authentic and authorized;
(3) the instrument has not been altered;
(4) the instrument is not subject to a defense or claim in recoupment of any party which can
be asserted against the warrantor;
(5) the warrantor has no knowledge of any insolvency proceeding commenced with respect
to the maker or acceptor or, in the case of an unaccepted draft, the drawer; and
(6) with respect to a 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 person to whom the warranties under subsection (a) are made and who took the
instrument in good faith may recover from the warrantor as damages for breach of warranty an
amount equal to the loss suffered as a result of the breach, but not more than the amount of the
instrument plus expenses and loss of interest incurred as a result of the breach.
(c) The warranties stated in subsection (a) 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) is discharged to the extent of any loss caused by the delay in
giving notice of the claim.
(d) A cause of action for breach of warranty under this section accrues when the claimant
has reason to know of the breach.
(e) A claim for breach of the warranty in subsection (a)(6) is available against a previous
transferor of the item only to the extent that under applicable law (including the applicable
choice-of-law principles) all previous transferors of the item made the warranty in subsection
(a)(6).
History: 1992 c 565 s 56; 2003 c 81 art 1 s 8; 2004 c 162 art 7 s 1