2007 Minnesota Statutes

336.3-417 MS 1990 [Repealed, 1992 c 565 s 114]
336.3-417 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;
(3) the warrantor has no knowledge that the signature of the 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 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 endorsement of the draft or an alteration of the draft, the warrantor may defend
by proving that the endorsement is effective under section 336.3-404 or 336.3-405 or the
drawer is precluded under section 336.3-406 or 336.4-406 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 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.
(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 principles) all previous transferors of the item made the warranty in subsection
(a)(4).
History: 1992 c 565 s 57; 2003 c 81 art 1 s 9; 2004 c 162 art 7 s 2