554.4208 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 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 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 purported 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 a warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount the drawee received oris entitled to receive from the drawer because of the 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 oris entitled to receive from the drawer because of the payment. In addition, the drawee isentitled to compensation for expenses and loss of interest resulting from the breach. Theright of the drawee to recover damages under this subsection is not affected by any failureof 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, and if the acceptor makespayment with respect to the draft, the acceptor is entitled to recover from a warrantor forbreach of warranty 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 item is presented for payment to a party obliged to pay the item, and the item is paid, theperson obtaining payment and a prior transferor of the item warrant to the person makingpayment in good faith that the warrantor is, or was, at the time the warrantor transferredthe item, a person entitled to enforce the item or authorized to obtain payment on behalf ofa person entitled to enforce the item. The person making payment may recover from anywarrantor for breach of warranty an amount equal to the amount paid plus expenses andloss of interest resulting from the breach. 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 warrantor,the warrantor is discharged to the extent of any loss caused by rranty is given to the warrantor within sixtydays 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 ofthe 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, §102, 120, 122; 2005 Acts, ch 11, §11, 12; 2013 Acts, ch 30, §261Referred to in §554.4302, 554.4406 Sat Dec 23 01:57:22 2023 Iowa Code 2024, Section 554.4208 (26, 0)
Iowa Legal Code