§ 10:3-417 — Presentment warranties

§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, the drawee is
entitled to compensation for expenses and loss of interest resulting from the breach. If the
drawee making payment sends written notice by certified or registered mail or commercial
courier to the warrantor of its claim for breach of warranty and the warrantor fails to pay the
claim within thirty days after receiving the notice, the expenses of the person to whom the
warranties are made shall include reasonable attorney fees. 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) of this
Section based on an unauthorized indorsement of the draft or an alteration of the draft, the
warrantor may defend by proving that the indorsement is effective under R.S. 10:3-404 or
10:3-405 or the drawer is precluded under R.S. 10:3-406 or 10:4-406 from asserting against
the drawee the unauthorized indorsement or alteration.
(d) If (i) a dishonored draft is presented for payment to the drawer or an indorser 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) of this Section cannot be
disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given
to the warrantor within thirty 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) of this
Section 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.

Legislative History

Acts 1992, No. 1133, §3, eff. July 1, 1992; Acts 1993, No. 948, §10, eff. Jan. 1, 1994; Acts 2024, No. 208, §1.