Title 41 — Uniform Commercial Code

This chapter may be cited as Uniform Commercial Code - Negotiable Instruments.

1. This chapter applies to negotiable instruments. It does not apply to money, to payment orders governed by chapter 41-04.1, or to securities governed by chapter 41-08. 2. In the event of conflict between this chapter and chapter 41-04 or 41-09, chapters 41-04 and 41-09 prevail …

1. In this chapter: a. "Acceptor" means a drawee that has accepted a draft. b. "Drawee" means a person ordered in a draft to make payment. c. "Drawer" means a person who signs or is identified in a draft as a person ordering payment. d. Reserved. e. "Maker" means a person who sig…

1. "Negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it: a. Is payable to bearer or to order at the time it is issued or first comes into possession of a …

1. "Issue" means: a. The first delivery of an instrument by the maker or drawer, whether to a holder or nonholder, for the purpose of giving rights on the instrument to any person; or b. If agreed by the payee, the first transmission by the drawer to the payee of an image of an i…

1. Except as provided in this section, for the purposes of subsection 1 of section 41-03-04, a promise or order is unconditional unless it states an express condition to payment or states that the promise or order is subject to or governed by another writing or that rights or obl…

Unless the instrument otherwise provides, an instrument that states the amount payable in foreign money may be paid in the foreign money or in an equivalent amount in dollars calculated by using the current bank-offered spot rate at the place of payment for the purchase of dollar…

1. A promise or order is "payable on demand" if it states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will of the holder, or if it does not state any time of payment. 2. A promise or order is "payable at a definite time" if it is pay…

1. A promise or order is payable to bearer if it meets any of the following conditions: a. States that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment. b. Does not state a payee.…

1. The person to whom an instrument is initially payable is determined by the intent of the person, whether or not authorized, signing as or in the name or behalf of the issuer of the instrument. The instrument is payable to the person intended by the signer even if that person i…

Except as otherwise provided for items in chapter 41-04, an instrument is payable at the place of payment stated in the instrument. If no place of payment is stated, an instrument is payable at the address of the drawee or maker stated in the instrument. If no address is stated, …

1. Unless otherwise provided in the instrument, an instrument is not payable with interest and interest on an interest-bearing instrument is payable from the date of the instrument. 2. Interest may be stated in an instrument as a fixed or variable amount of money or it may be exp…

1. An instrument may be antedated or postdated. The date stated determines the time of payment if the instrument is payable at a fixed period after date. Except as provided in subsection 3 of section 41-04-28, an instrument payable on demand is not payable before the date of the …

If an instrument contains contradictory terms, typewritten terms prevail over printed terms, handwritten terms prevail over both, and words prevail over numbers.

1. "Incomplete instrument" means a signed writing, whether or not issued by the signer, the contents of which show at the time of signing that it is incomplete but that the signer intended it to be completed by the addition of words or numbers. 2. Subject to subsection 3, if an i…

1. Except as otherwise provided in the instrument, two or more persons who have the same liability on an instrument as makers, drawers, acceptors, endorsers who are endorsing joint payees, or anomalous endorsers are jointly and severally liable in the capacity in which they sign.…

Subject to applicable law regarding exclusion of proof of contemporaneous or prior agreements, the obligation of a party to an instrument to pay the instrument may be modified, supplemented, or nullified by a separate agreement of the obligor and a person entitled to enforce the …

1. Except as provided in subsection 5, an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerate…

In an action for breach of an obligation for which a third person is answerable over under this chapter or chapter 41-04, the defendant may give the third person written notice of the litigation, and the person notified may then give similar notice to any other person who is answ…

1. "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument to a person who thereby becomes its holder, if possession is obtained from a person other than the issuer of the instrument. 2. Except for negotiation by a remitter, if an instrume…

1. Negotiation is effective even if obtained from an infant, a corporation exceeding its powers, or a person without capacity, by fraud, duress, or mistake, or in breach of duty or as part of an illegal transaction. 2. To the extent permitted by other law, negotiation may be resc…

1. An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument. 2. Transfer of an instrument, regardless of whether the transfer is a negotiation, vests in the t…

1. "Endorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of negotiating the instrument, restricting payment of the instrument, or incurring endorser's liability…

1. An endorsement 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. 2. An endorsement stating a condition to the right of the endorsee t…

Reacquisition of an instrument occurs if it is transferred, by negotiation or otherwise, to a former holder. A former holder that reacquires the instrument may cancel endorsements made after the reacquirer first became a holder of the instrument. If the cancellation causes the in…

"Person entitled to enforce" an instrument means the holder of the instrument, a nonholder in possession of the instrument who has the rights of a holder, or a person not in possession of the instrument who is entitled to enforce the instrument under section 41-03-35 or subsectio…

1. Subject to subsection 3 and to subsection 4 of section 41-03-06, "holder in due course" means the holder of an instrument if: a. The instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregula…

1. An instrument is issued or transferred for value if any of the following exist: a. The instrument is issued or transferred for a promise of performance, to the extent the promise has been performed. b. The transferee acquires a security interest or other lien in the instrument…

1. An instrument payable on demand becomes overdue at the earliest of the following times: a. On the day after the day demand for payment is duly made. b. If the instrument is a check, ninety days after its date. c. If the instrument is not a check, when the instrument has been o…

1. Except as stated in subsection 2, the right to enforce the obligation of a party to pay the instrument is subject to the following: a. A defense of the obligor based on infancy of the obligor to the extent it is a defense to a simple contract, duress, lack of legal capacity, o…

A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A perso…

In this section: 1. "Fiduciary" means an agent, trustee partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument. 2. In the case of an instrument payable to the represented person of the fiduciary, as such, the taker has…

1. In an action with respect to an instrument, the authenticity of and authority to make each signature on the instrument is admitted unless specifically denied in the pleadings. If the validity of a signature is denied in the pleadings, the burden of establishing validity is on …

1. A person not in possession of an instrument is entitled to enforce the instrument if that person was in rightful possession of the instrument and entitled to enforce it when loss of possession occurred; the loss of possession was not the result of a transfer by that person or …

1. Unless otherwise agreed, if a certified check, cashier's check, or teller's check is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligat…

1. This section applies if a person against whom a claim is asserted proves that that person in good faith tendered an instrument to the claimant as full satisfaction of the claim, the amount of the claim was unliquidated or subject to a bona fide dispute, and the claimant obtain…

A person is not liable on an instrument unless the person signed the instrument or the person is represented by an agent or representative who signed the instrument and the signature is binding on the represented person under section 41-03-39.

1. If a person acting, or purporting to act, as a representative signs an instrument by signing either the name of the represented person or the name of the signer, the represented person is bound by the signature to the same extent the represented person would be bound if the si…

1. Unless otherwise provided in this chapter or chapter 41-04, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified f…

1. 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 endors…

1. This section applies to fraudulent endorsements 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: a. "Employee" includes, in addition to an employee …

1. "Alteration" means an unauthorized change in an instrument that purports to modify in any respect the obligation of a party to the instrument or an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of any party to …

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.

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 …

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 subsection 4 of section 41-03-56, 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 incom…

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…