7-3-415
Section 7-3-415 Obligation of indorser. (a) Subject to subsections (b), (c), and (d) and to
Section 7-3-419(d), if an instrument is dishonored, an indorser is obliged to pay the amount
due on the instrument (i) according to the terms of the instrument at the time it was indorsed,
or (ii) if the indorser indorsed an incomplete instrument, according to its terms when completed,
to the extent stated in Sections 7-3-115 and 7-3-407. The obligation of the indorser is owed
to a person entitled to enforce the instrument or to a subsequent indorser who paid the instrument
under this section. (b) If an indorsement states that it is made "without recourse"
or otherwise disclaims liability of the indorser, the indorser is not liable under subsection
(a) to pay the instrument. (c) If notice of dishonor of an instrument is required by Section
7-3-503 and notice of dishonor complying with that section is not given to an indorser, the
liability of the indorser under subsection (a) is discharged. (d)...
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7-4-207
Section 7-4-207 Transfer warranties. (a) A customer or collecting bank that transfers an item
and receives a settlement or other consideration warrants to the transferee and to any subsequent
collecting bank that: (1) The warrantor is a person entitled to enforce the item; (2) All
signatures on the item are authentic and authorized; (3) The item has not been altered; (4)
The item is not subject to a defense or claim in recoupment (Section 7-3-305(a)) of any party
that can be asserted against the warrantor; and (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. (b) If an item is dishonored, a customer or collecting bank
transferring the item and receiving settlement or other consideration is obliged to pay the
amount due on the item (i) according to the terms of the item at the time it was transferred,
or (ii) if the transfer was of an incomplete item, according to its terms...
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7-3-416
Section 7-3-416 Transfer warranties. (a) A person who transfers an instrument for consideration
warrants to the transferee and, if the transfer is by indorsement, 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; and (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. (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...
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7-3-206
Section 7-3-206 Restrictive indorsement. (a) An indorsement limiting payment to a particular
person or otherwise prohibiting further transfer or negotiation of the instrument is not effective
to prevent further transfer or negotiation of the instrument. (b) An indorsement stating a
condition to the right of the indorsee to receive payment does not affect the right of the
indorsee to enforce the instrument. A person paying the instrument or taking it for value
or collection may disregard the condition, and the rights and liabilities of that person are
not affected by whether the condition has been fulfilled. (c) If an instrument bears an indorsement
(i) described in Section 7-4-201(b), or (ii) in blank or to a particular bank using the words
"for deposit," "for collection," or other words indicating a purpose of
having the instrument collected by a bank for the indorser or for a particular account, the
following rules apply: (1) A person, other than a bank, who purchases the instrument...
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7-3-417
Section 7-3-417 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;
and (3) The warrantor has no knowledge that the signature of the drawer of the draft is unauthorized.
(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,...
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7-3-602
Section 7-3-602 Payment. (a) Subject to subsection (b), an instrument is paid to the extent
payment is made (i) by or on behalf of a party obliged to pay the instrument, and (ii) to
a person entitled to enforce the instrument. To the extent of the payment, the obligation
of the party obliged to pay the instrument is discharged even though payment is made with
knowledge of a claim to the instrument under Section 7-3-306 by another person. (b) The obligation
of a party to pay the instrument is not discharged under subsection (a) if: (1) A claim to
the instrument under Section 7-3-306 is enforceable against the party receiving payment and
(i) payment is made with knowledge by the payor that payment is prohibited by injunction or
similar process of a court of competent jurisdiction, or (ii) in the case of an instrument
other than a cashier's check, teller's check, or certified check, the party making payment
accepted, from the person having a claim to the instrument, indemnity against loss...
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7-3-404
Section 7-3-404 Impostors; fictitious payees. (a) If an impostor, by use of the mails or otherwise,
induces the issuer of an instrument to issue the instrument to the impostor, or to a person
acting in concert with the impostor, by impersonating the payee of the instrument or a person
authorized to act for the payee, an indorsement of the instrument by any person in the name
of the payee is effective as the indorsement of the payee in favor of a person who, in good
faith, pays the instrument or takes it for value or for collection. (b) If (i) a person whose
intent determines to whom an instrument is payable (Section 7-3-110(a) or (b)) does not intend
the person identified as payee to have any interest in the instrument, or (ii) the person
identified as payee of an instrument is a fictitious person, the following rules apply until
the instrument is negotiated by special indorsement: (1) Any person in possession of the instrument
is its holder. (2) An indorsement by any person in the...
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7-3-605
Section 7-3-605 Discharge of indorsers and accommodation parties. (a) In this section, the
term "indorser" includes a drawer having the obligation described in Section 7-3-414(d).
(b) Discharge, under Section 7-3-604, of the obligation of a party to pay an instrument does
not discharge the obligation of an indorser or accommodation party having a right of recourse
against the discharged party. (c) If a person entitled to enforce an instrument agrees, with
or without consideration, to an extension of the due date of the obligation of a party to
pay the instrument, the extension discharges an indorser or accommodation party having a right
of recourse against the party whose obligation is extended to the extent the indorser or accommodation
party proves that the extension caused loss to the indorser or accommodation party with respect
to the right of recourse. (d) If a person entitled to enforce an instrument agrees, with or
without consideration, to a material modification of the...
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7-3-405
Section 7-3-405 Employer's responsibility for fraudulent indorsement by employee. (a) This
section applies to fraudulent indorsements of instruments with respect to which an employer
has entrusted an employee with responsibility as part of the employee's duties. The following
definitions apply to this section: (1) "Employee" includes an independent contractor
and employee of an independent contractor retained by the employer. (2) "Fraudulent indorsement"
means (i) in the case of an instrument payable to the employer, a forged indorsement purporting
to be that of the employer, or (ii) in the case of an instrument with respect to which the
employer is the issuer, a forged indorsement purporting to be that of the person identified
as payee. (3) "Responsibility" with respect to instruments means authority (i) to
sign or indorse instruments on behalf of the employer, (ii) to process instruments received
by the employer for bookkeeping purposes, for deposit to an account, or for other...
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7-3-414
Section 7-3-414 Obligation of drawer. (a) This section does not apply to cashier's checks or
other drafts drawn on the drawer. (b) If an unaccepted draft is dishonored, the drawer is
obliged to pay the draft (i) according to its terms at the time it was issued or, if not issued,
at the time it first came into possession of a holder, or (ii) if the drawer signed an incomplete
instrument, according to its terms when completed, to the extent stated in Sections 7-3-115
and 7-3-407. The obligation is owed to a person entitled to enforce the draft or to an indorser
who paid the draft under Section 7-3-415. (c) If a draft is accepted by a bank, the drawer
is discharged, regardless of when or by whom acceptance was obtained. (d) If a draft is accepted
and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft
is dishonored by the acceptor is the same as the obligation of an indorser under Section 7-3-415(a)
and (c). (e) If a draft states that it is drawn...
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