554.3417 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 timeof presentment, and a previous transferor of the draft, at the time of transfer, warrant to thedrawee making payment or accepting 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 onbehalf of a person entitled to enforce the draft; b. the draft has not been altered;c. the warrantor has no knowledge that the signature of the drawer of the draft is unauthorized; and d. if the draft is a demand draft, the creation of the demand draft according to the terms on its face was authorized by the person identified as the drawer. 2. 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 isentitled to receive from the drawer because of the payment. y recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received or isentitled to receive from the drawer because of the payment. In addition, the drawee is entitledto compensation for expenses and loss of interest resulting from the breach. The right ofthe drawee to recover damages under this subsection is not affected by any failure of thedrawee to exercise ordinary care in making payment. If the drawee accepts the draft, breachof warranty is a defense to the obligation of the acceptor. If the acceptor makes paymentwith respect to the draft, the acceptor is entitled to recover from any warrantor for breach ofwarranty the amounts stated in this subsection. 3. If a drawee asserts a claim for breach of warranty under subsection 1 based on an unauthorized endorsement of the draft or an alteration of the draft, the warrantor maydefend by proving that the endorsement is effective under section 554.3404 or 554.3405or the drawer is precluded under section 554.3406 or 554.4406 from asserting against thedrawee the unauthorized endorsement or alteration. 4. ndorsement is effective under section 554.3404 or 554.3405or the drawer is precluded under section 554.3406 or 554.4406 from asserting against thedrawee the unauthorized endorsement or alteration. 4. If a dishonored draft is presented for payment to the drawer or an endorser or any other instrument is presented for payment to a party obliged to pay the instrument, and paymentis received, the following rules apply: a. 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 warrantortransferred the instrument, a person entitled to enforce the instrument or authorized to obtainpayment on behalf of a person entitled to enforce the instrument. b. 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 thebreach. 5. The warranties stated in subsections 1 and 4 cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within sixtydays after the claimant has reason to know of the breach and the identity of the sclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within sixtydays after the claimant has reason to know of the breach and the identity of the warrantor,the liability of the warrantor under subsection 2 or 4 is discharged to the extent of any losscaused by the delay in giving notice of the claim. 6. A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach. 7. A demand draft is a check as provided in section 554.3104, subsection 6.8. If a warranty under subsection 1, paragraph 'd', is not given by a transferor under applicable conflict of laws rules, the warranty is not given to that transferor when thattransferor is a transferee. 94 Acts, ch 1167, §64, 121, 122; 2005 Acts, ch 11, §6, 7; 2013 Acts, ch 30, §261Referred to in §554.3418 Sat Dec 23 01:57:00 2023 Iowa Code 2024, Section 554.3417 (26, 0)
Iowa Legal Code