Title XIII, COMMERCE (Ch. 505 - 554I)

A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it. 94 Acts, ch 1167, §55, 121, 122

1. “Acceptance” means the drawee’s signed agreement to pay a draft as presented. It must be written on the draft and may consist of the drawee’s signature alone. Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the ac…

1. If the terms of a drawee’s acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance. 2. The terms of a draft are not varied by an acceptance to pay at a …

1. In this section , “obligated bank” means the acceptor of a certified check or the issuer of a cashier’s check or teller’s check bought from the issuer. 2. If the obligated bank wrongfully refuses to pay a cashier’s check or certified check, stops payment of a teller’s check, o…

The issuer of a note or cashier’s check or other draft drawn on the drawer is obliged to pay the instrument 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 if the issuer signed an incomplete instrument,…

1. The acceptor of a draft is obliged to pay the draft according to its terms at the time it was accepted, even though the acceptance states that the draft is payable “as originally drawn” or equivalent terms, if the acceptance varies the terms of the draft, according to the term…

1. This section does not apply to cashier’s checks or other drafts drawn on the drawer. 2. If an unaccepted draft is dishonored, the drawer is obliged to pay the draft according to its terms at the time it was issued or, if not issued, at the time it first came into possession of…

1. Subject to subsections 2, 3, and 4 and to section 554.3419, subsection 4 , if an instrument is dishonored, an endorser is obliged to pay the amount due on the instrument according to the terms of the instrument at the time it was endorsed, or if the endorser endorsed an incomp…

1. A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by endorsement, to any subsequent transferee that: a. the warrantor is a person entitled to enforce the instrument; b. all signatures on the instrument are authentic and a…

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 time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee …

1. Except as provided in subsection 3 , if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that payment of the draft had not been stopped pursuant to section 554.4403 or the signature of the drawer of the draft was authorized, the drawe…

1. If an instrument is issued for value given for the benefit of a party to the instrument (“accommodated party”) and another party to the instrument (“accommodation party”) signs the instrument for the purpose of incurring liability on the instrument without being a direct benef…

1. The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instr…

1. “Presentment” means a demand made by or on behalf of a person entitled to enforce an instrument: a. to pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank; or b. to accept a d…

1. Dishonor of a note is governed by the following rules: a. If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment. b. If the note is not payable on demand and is payable at or through …

1. The obligation of an endorser stated in section 554.3415, subsection 1 , and the obligation of a drawer stated in section 554.3414, subsection 4 , may not be enforced unless the endorser or drawer is given notice of dishonor of the instrument complying with this section or not…

1. Presentment for payment or acceptance of an instrument is excused if the person entitled to present the instrument cannot with reasonable diligence make presentment; the maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceeding…

1. The following are admissible as evidence and create a presumption of dishonor and of any notice of dishonor stated: a. a document regular in form as provided in subsection 2 which purports to be a protest; b. a purported stamp or writing of the drawee, payor bank, or presentin…

1. The holder of a dishonored check, draft, or order may assess against the maker of that check, draft, or order a surcharge not to exceed thirty dollars. 2. The surcharge authorized by this section shall not be assessed unless the holder clearly and conspicuously posts a notice …

1. In a civil action against a person who makes a check, draft, or order, which has been dishonored for lack of funds or credit, after having been presented twice, or because the maker has no account with the drawee, the plaintiff shall recover from the defendant total damages eq…

1. The obligation of a party to pay the instrument is discharged as stated in this Article or by an act or agreement with the party which would discharge an obligation to pay money under a simple contract. 2. Discharge of the obligation of a party is not effective against a perso…

1. Subject to subsection 2 , an instrument is paid to the extent payment is made by or on behalf of a party obliged to pay the instrument, and to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument i…

1. If tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument, the effect of tender is governed by principles of law applicable to tender of payment under a simple contract. 2. If tender of payment of an obligation to pay an …

1. A person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrumen…

1. In this section , the term “endorser” includes a drawer having the obligation described in section 554.3414, subsection 4 . 2. Discharge, under section 554.3604 , of the obligation of a party to pay an instrument does not discharge the obligation of an endorser or accommodatio…

This Article may be cited as Uniform Commercial Code — Bank Deposits and Collections. [C66, 71, 73, 75, 77, 79, 81, §554.4101 ] 94 Acts, ch 1167, §78, 122

1. To the extent that items within this Article are also within Articles 3 and 8 , they are subject to the provisions of those Articles. If there is conflict, this Article governs Article 3 , but Article 8 governs this Article . 2. The liability of a bank for action or nonaction …

1. The effect of the provisions of this Article may be varied by agreement, but the parties to the agreement cannot disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. However, t…

1. In this Article , unless the context otherwise requires: a. “Account” means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit. b. “Afternoon” means t…

In this Article : 1. “Bank” means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or trust company. 2. “Depositary bank” means the first bank to take an item even though it is also the payor bank, unless the item …

1. If an item states that it is “payable through” a bank identified in the item, the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item, and the item may be presented for payment only by or through the bank. 2. If an item state…

A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this Article and under Article 3 . [C66, 71, 73, 75, 77, 79, 81, §554.…

1. For the purpose of allowing time to process items, prove balances, and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of 2:00 p.m. or later as a cutoff hour for the handling of money and items and the making of e…

1. Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payor other than a bank, and with or without the approval of any person involved, may waive, modify, or extend time limits imposed or permitted by this chapter…

1. “Agreement for electronic presentment” means an agreement, clearing-house rule, or federal reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item ( “presentment notic…

An action to enforce an obligation, duty, or right arising under this Article must be commenced within three years after the cause of action accrues. 2005 Acts, ch 11, §8

1. Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the item and any settlement given for the item is provisional.…

1. A collecting bank must exercise ordinary care in: a. presenting an item or sending it for presentment; b. sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank’s transferor after learning that the item has not been paid or acc…

Subject to Article 3 concerning conversion of instruments ( section 554.3420 ) and restrictive endorsements ( section 554.3206 ), only a collecting bank’s transferor can give instructions that affect the bank or constitute notice to it, and a collecting bank is not liable to prio…

1. A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of those items on hand, the cost of collection involved, and the method generally used by it or others to present those items. …

If a customer delivers an item to a depositary bank for collection: 1. The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer endorses the item,…

Any agreed method that identifies the transferor bank is sufficient for the item’s further transfer to another bank. [C66, 71, 73, 75, 77, 79, 81, §554.4206 ] 94 Acts, ch 1167, §93, 122

1. 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: a. the warrantor is a person entitled to enforce the item; b. all signatures on the item are authentic a…

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 time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee …

1. A person who encodes information on or with respect to an item after issue warrants to any subsequent collecting bank and to the payor bank or other payor that the information is correctly encoded. If the customer of a depositary bank encodes, that bank also makes the warranty…

1. A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either: a. in case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied; b. in case of an item for which it has …