Title 5, Uniform Commercial Code

Course of Dealing and Usage of Trade. (1) A course of dealing is a sequence of previous conduct between the parties to a particular transaction which is fairly to be regarded as establishing a common basis of understanding for interpreting their expressions and other conduct. (2)…

Statute of Frauds for Kinds of Personal Property Not Otherwise Covered. (1) Except in the cases described in subsection (2) of this section a contract for the sale of personal property is not enforceable by way of action or defense beyond $5,000 in amount or value of remedy unles…

Performance or Acceptance Under Reservation of Rights. A party who with explicit reservation of rights performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. Such words as “with…

Option to Accelerate at Will. A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or “when he deems himself insecure” or in words of similar import shall be construed to mean t…

Subordinated Obligations. An obligation may be issued as subordinated to payment of another obligation of the person obligated, or a creditor may subordinate his right to payment of an obligation by agreement with either the person obligated or another creditor of the person obli…

Formal Requirements; Statute of Frauds. (1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has …

Final Written Expression: Parol or Extrinsic Evidence. Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are incl…

Seals Inoperative. The affixing of a seal to a writing evidencing a contract for sale or an offer to buy or sell goods does not constitute the writing a sealed instrument and the law with respect to sealed instruments does not apply to such a contract or offer. Source: PL 3-56, §…

Formation in General. (1) A contract for sale of goods may be made in any manner sufficient to show agreement, including conduct by both parties which recognizes the existence of such a contract. (2) An agreement sufficient to constitute a contract for sale may be found even thou…

Firm Offers. An offer by a merchant to buy or sell goods in a signed writing which by its terms gives assurance that it will be held open is not revocable, for lack of consideration, during the time stated or if no time is stated for a reasonable time, but in no event may such pe…

Offer and Acceptance in Formation of Contract. (1) Unless otherwise unambiguously indicated by the language or circumstances: (a) An offer to make a contract shall be construed as inviting acceptance in any manner and by any medium reasonable in the circumstances; (b) An order or…

Additional Terms in Acceptance or Confirmation. (1) A definite and seasonable expression of acceptance or a written confirmation which is sent within a reasonable time operates as an acceptance even though it states terms additional to or different from those offered or agreed up…

Course of Performance or Practical Construction. (1) Where the contract for sale involves repeated occasions for performance by either party with knowledge of the nature of the performance and opportunity for objection to it by the other, any course of performance accepted or acq…

Modification, Rescission and Waiver. (1) An agreement modifying a contract within this division needs no consideration to be binding. (2) A signed agreement which excludes modification or rescission except by a signed writing cannot be otherwise modified or rescinded, but except …

Delegation of Performance; Assignment of Rights. (1) A party may perform his duty through a delegate unless otherwise agreed or unless the other party has a substantial interest in having his original promisor perform or control the acts required by the contract. No delegation of…

Transfer: Right to Indorsement. (1) Transfer of an instrument vests in the transferee such rights as the transferor has therein, except that a transferee who has himself been a party to any fraud or illegality affecting the instrument or who as a prior holder had notice of a defe…

Negotiation. (1) Negotiation is the transfer of an instrument in such form that the transferee becomes a holder. If the instrument is payable to order it is negotiated by delivery with any necessary indorsement; if payable to bearer it is negotiated by delivery. (2) An indorsemen…

Wrong or Misspelled Name. Where an instrument is made payable to a person under a misspelled name or one other than his own he may indorse in that name or his own or both; but signature in both names may be required by a person paying or giving value for the instrument. Source: P…

Special Indorsement; Blank Indorsement. (1) A special indorsement specifies the person to whom or to whose order it makes the instrument payable. Any instrument specially indorsed becomes payable to the order of the special indorsee and may be further negotiated only by his indor…

Restrictive Indorsements. An indorsement is restrictive which either: (a) Is conditional; or (b) Purports to prohibit further transfer of the instrument; or (c) Includes the words “for collection,” “for deposit,” “pay any bank,” or like terms signifying a purpose of deposit or co…

Effect of Restrictive Indorsement. (1) No restrictive indorsement prevents further transfer or negotiation of the instrument. (2) An intermediary bank, or a payor bank which is not the depositary bank, is neither given notice nor otherwise affected by a restrictive indorsement of…

Negotiation Effective Although It May Be Rescinded. (1) Negotiation is effective to transfer the instrument although the negotiation is: (a) Made by an infant, a corporation exceeding its powers, or any other person without capacity; or (b) Obtained by fraud, duress or mistake of…

Reacquisition. Where an instrument is returned to or reacquired by a prior party he may cancel any indorsement which is not necessary to his title and reissue or further negotiate the instrument, but any intervening party is discharged as against the reacquiring party and subsequ…

Presumption and Duration of Agency Status of Collecting Banks and Provisional Status of Credits; Applicability of Division; Item Indorsed “Pay Any Bank.” (1) Unless a contrary intent clearly appears and prior to the time that a settlement given by a collecting bank for an item is…

Responsibility for Collection; When Action Seasonable. (1) A collecting bank must use ordinary care in: (a) Presenting an item or sending it for presentment; and (b) Sending notice of dishonor or non-payment or returning an item other than a documentary draft to the bank’s transf…

Effect of Instructions. Subject to the provisions of division 3 of this title concerning conversion of instruments (5 CMC § 3419) and the provisions of both division 3 of this title and this division concerning restrictive indorsements only a collecting bank’s transferor can be g…

Methods of Sending and Presenting; Sending Direct to Payor Bank. (1) A collecting bank must send items by reasonably prompt method taking into consideration any relevant instructions, the nature of the item, the number of such items on hand, and the cost of collection involved an…

Supplying Missing Indorsement; No Notice from Prior Indorsement. (1) A depositary bank which has taken an item for collection may supply any indorsement of the customer which is necessary to title unless the item contains the words “payee’s indorsement required” or the like. In t…

Transfer Between Banks. Any agreed method which identifies the transferor bank is sufficient for the item’s further transfer to another bank. Source: PL 3-56, § 1 (§ 4206).

Warranties of Customer and Collecting Bank on Transfer or Presentment of Items; Time for Claim. (1) Each customer or collecting bank who obtains payment or acceptance of an item and each prior customer and collecting bank warrants to the payor bank or other payor who in good fait…

Security Interest of Collecting Bank in Items, Accompanying Documents and Proceedings. (1) A 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 th…

When Bank Gives Value for Purposes of Holder in Due Course. For purposes of determining its status as a holder in due course, the bank has given value to the extent that it has a security interest in an item provided that the bank otherwise complies with the requirements of 5 CMC…

Presentment by Notice of Item Not Payable by, Through or at a Bank; Liability of Secondary Parties. (1) Unless otherwise instructed, a collecting bank may present an item not payable by, through or at a bank by sending to the party to accept or pay a written notice that the bank …

Media of Remittance; Provisional and Final Settlement in Remittance Cases. (1) A collecting bank may take in settlement of an item: (a) A check of the remitting bank or of another bank on any bank except the remitting bank; or (b) A cashier’s check or similar primary obligation o…

Right of Charge-Back or Refund. (1) If a collecting bank has made provisional settlement with its customer for an item and itself fails by reason of dishonor, suspension of payments by a bank or otherwise to receive a settlement for the item which is or becomes final, the bank ma…

Final Payment of Item by Payor Bank; When Provisional Debits and Credits Become Final; When Certain Credits Become Available for Withdrawal. (1) An item is finally paid by a payor bank when the bank has done any of the following, whichever happens first: (a) Paid the item in cash…

Insolvency and Preference. (1) Any item in or coming into the possession of a payor or collecting bank which suspends payment and which item is not finally paid shall be returned by the receiver, trustee or agent in charge of the closed bank to the presenting bank or the closed b…

Who May Issue a Warehouse Receipt; Storage Under Government Bond. (1) A warehouse receipt may be issued by any warehouseman. (2) Where goods including distilled spirits and agricultural commodities are stored under a statute requiring a bond against withdrawal or a license for th…

Form of Warehouse Receipt; Essential Terms; Optional Terms. (1) A warehouse receipt need not be in any particular form. (2) Unless a warehouse receipt embodies within its written or printed terms each of the following, the warehouseman is liable for damages caused by the omission…

Liability for Non-Receipt or Misdescription. A party to or purchaser for value in good faith of a document of title other than a bill of lading relying in either case upon the description therein of the goods may recover from the issuer damages caused by the non-receipt or misdes…

Duty of Care; Contractual Limitation of Warehouseman’s Liability. (1) A warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances but unle…

Title Under Warehouse Receipt Defeated in Certain Cases. A buyer in the ordinary course of business of fungible goods sold and delivered by a warehouseman who is also in the business of buying and selling such goods takes free of any claim under a warehouse receipt even though it…

Termination of Storage at Warehouseman’s Option. (1) A warehouseman may on notifying the person on whose account the goods are held and any other person known to claim an interest in the goods require payment of any charges and removal of the goods from the warehouse at the termi…

Goods Must Be Kept Separate; Fungible Goods. (1) Unless the warehouse receipt otherwise provides, a warehouseman must keep separate the goods covered by each receipt so as to permit at all times identification and delivery of those goods except that different lots of fungible goo…

Altered Warehouse Receipts. Where a blank in a negotiable warehouse receipt has been filled in without authority, a purchaser for value and without notice of the want of authority may treat the insertion as authorized. Any other unauthorized alteration leaves any receipt enforcea…

Lien of Warehouseman. (1) A warehouseman has a lien against the bailor on the goods covered by a warehouse receipt or on the proceeds thereof in his possession for charges for storage or transportation (including demurrage and terminal charges), insurance, labor, or charges prese…