Title 5, Uniform Commercial Code

Signature in Ambiguous Capacity. Unless the instrument clearly indicates that a signature is made in some other capacity it is an indorsement. Source: PL 3-56, § 1 (§ 3402).

Signature by Authorized Representative. (1) A signature may be made by an agent or other representative, and his authority to make it may be established as in other cases of representation. No particular form of appointment is necessary to establish such authority. (2) An authori…

Unauthorized Signatures. (1) Any unauthorized signature is wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it; but it operates as the signature of the unauthorized signer in favor of any person who in good faith pay…

Impostors; Signature in Name of Payee. (1) An indorsement by any person in the name of a named payee is effective if: (a) An impostor by use of the mails or otherwise has induced the maker or drawer to issue the instrument to him or his confederate in the name of the payee; or (b…

Negligence Contributing to Alteration or Unauthorized Signature. Any person who by his negligence substantially contributes to a material alteration of the instrument or to the making of an unauthorized signature is precluded from asserting the alteration or lack of authority aga…

Alteration. (1) Any alteration of an instrument is material which changes the contract of any party thereto in any respect, including any such change in: (a) The number or relations of the parties; or (b) An incomplete instrument, by completing it otherwise than as authorized; or…

Consideration. Want or failure of consideration is a defense as against any person not having the rights of a holder in due course (5 CMC § 3305), except that no consideration is necessary for an instrument or obligation thereon given in payment of or as security for an anteceden…

Draft not an Assignment. (1) A check or other draft does not of itself operate as an assignment of any funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until he accepts it. (2) Nothing in this section shall affect any liab…

Definition and Operation of Acceptance. (1) Acceptance is the drawee’s signed engagement to honor the draft as presented. It must be written on the draft, and may consist of his signature alone. It becomes operative when completed by delivery or notification. (2) A draft may be a…

Certification of a Check. (1) Certification of a check is acceptance. Where a holder procures certification the drawer and all prior indorsers are discharged. (2) Unless otherwise agreed a bank has no obligation to certify a check. (3) A bank may certify a check before returning …

Acceptance Varying Draft. (1) Where the drawee’s proffered acceptance in any manner varies the draft as presented the holder may refuse the acceptance and treat the draft as dishonored in which case the drawee is entitled to have his acceptance canceled. (2) The terms of the draf…

Contract of Maker, Drawer and Acceptor. (1) The maker or acceptor engages that he will pay the instrument according to its tenor at the time of his engagement or as completed pursuant to 5 CMC § 3115 on incomplete instruments. (2) The drawer engages that upon dishonor of the draf…

Contract of Indorser; Order of Liability. (1) Unless the indorsement otherwise specifies (as by such words as “without recourse”) every indorser engages that upon dishonor and any necessary notice of dishonor and protest he will pay the instrument according to its tenor at the ti…

Contract of Accommodation Party. (1) An accommodation party is one who signs the instrument in any capacity for the purpose of lending his name to another party to it. (2) When the instrument has been taken for value before it is due the accommodation party is liable in the capac…

Contract of Guarantor. (1) “Payment guaranteed” or equivalent words added to a signature mean that the signer engages that if the instrument is not paid when due he will pay it according to its tenor without resort by the holder to any other party. (2) “Collection guaranteed” or …

Warranties on Presentment and Transfer. (1) Any person who obtains payment or acceptance and any prior transferor warrants to a person who in good faith pays or accepts that: (a) He has a good title to the instrument or is authorized to obtain payment or acceptance on behalf of o…

Finality of Payment or Acceptance. Except for recovery of bank payments as provided in the division on bank deposits and collections (division 4 of this title [5 CMC § 4101 et seq.]) and except for liability for breach of warranty on presentment under 5 CMC § 3417, payment or acc…

Conversion of Instrument; Innocent Representative. (1) An instrument is converted when: (a) A drawee to whom it is delivered for acceptance refuses to return it on demand; or (b) Any person to whom it is delivered for payment refuses on demand either to pay or to return it; or (c…

When Bank May Charge Customer’s Account. (1) As against its customer, a bank may charge against his account any item which is otherwise properly payable from that account even though the charge creates an overdraft. (2) A bank which in good faith makes payment to a holder may cha…

Bank’s Liability to Customer for Wrongful Dishonor. A payor bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability is limited to actual damages proved. If so proximately caused and prov…

Customer’s Right to Stop Payment; Burden of Proof of Loss. (1) A customer may by order to his bank stop payment of any item payable for his account but the order must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it prior to …

Bank Not Obligated to Pay Check More Than Six Months Old. A bank is under no obligation to a customer having a checking account to pay a check, other than a certified check, which is presented more than six months after its date, but it may charge its customer’s account for a pay…

Death or Incompetence of Customer. (1) A payor or collecting bank’s authority to accept, pay or collect an item or to account for proceeds of its collection if otherwise effective is not rendered ineffective by incompetence of a customer of either bank existing at the time the it…

Customer’s Duty to Discover and Report Unauthorized Signature or Alteration. (1) When a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries or holds the statement and items pursuant to a request for instruction…

Payor Bank’s Right to Subrogation on Improper Payment. If a payor bank has paid an item over the stop payment order of the drawer or maker or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent nec…

Irregularities in Issue of Receipt or Bill or Conduct of Issuer. The obligations imposed by this division on an issuer apply to a document of title regardless of the fact that: (a) The document may not comply with the requirements of this division or of any other law or regulatio…

Duplicate Receipt or Bill; Overissue. Neither a duplicate nor any other document of title purporting to cover goods already represented by an outstanding document of the same issuer confers any right in the goods, except as provided in the case of bills in a set, overissue of doc…

Obligation of Warehouseman or Carrier to Deliver; Excuse. (1) The bailee must deliver the goods to a person entitled under the document who complies with subsections (2) and (3) of this section, unless and to the extent that the bailee establishes any of the following: (a) Delive…

No Liability for Good Faith Delivery Pursuant to Receipt or Bill. A bailee who in good faith including observance of reasonable commercial standards has received goods and delivered or otherwise disposed of them according to the terms of the document of title or pursuant to this …

Duty of Issuer to Register Transfer, Pledge, or Release. (1) If a certificated security in registered form is presented to the issuer with a request to register transfer or an instruction is presented to the issuer with a request to register transfer, pledge, or release, the issu…

Assurance that Indorsements and Instructions Are Effective. (1) The issuer may require the following assurance that each necessary indorsement of a certificated security or each instruction (5 CMC § 8308) is genuine and effective: (a) In all cases, a guarantee of the signature (5…

Issuer’s Duty as to Adverse Claims. (1) An issuer to whom a certificated security is presented for registration shall inquire into adverse claims if: (a) A written notification of an adverse claim is received at a time and in a manner affording the issuer a reasonable opportunity…

Liability and Non-Liability for Registration. (1) Except as provided in any law relating to the collection of taxes, the issuer is not liable to the owner, pledgee, or any other person suffering loss as a result of the registration of a transfer, pledge, or release of a security …

Lost, Destroyed, and Stolen Certificated Securities. (1) If a certificated security has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the issuer of that fact within a reasonable time after he has notice of it and the issuer registers a transf…

Duty of Authenticating Trustee, Transfer Agent, or Registrar. (1) If a person acts as authenticating trustee, transfer agent, registrar, or other agent for an issuer in the registration of transfers of its certificated securities or in the registration of transfers, pledges, and …

Exchangeability of Securities. (1) No issuer is subject to the requirements of this section unless it regularly maintains a system for issuing the class of securities involved under which both certificated and uncertificated securities are regularly issued to the category of owne…

Statements of Uncertificated Securities. (1) Within two business days after the transfer of an uncertificated security has been registered, the issuer shall send to the new registered owner and, if the security has been transferred subject to a registered pledge, to the registere…

Place of Filing; Erroneous Filing; Removal of Collateral. (1) The proper place to file in order to perfect a security interest is the office of the clerk of the Commonwealth Trial Court. (2) A filing which is made in good faith in an improper place is nevertheless effective with …

Formal Requisites of Financing Statement; Amendments; Mortgage as Financing Statement. (1) A financing statement is sufficient if it gives the names of the debtor and the secured party, is signed by the debtor, gives an address of the secured party from which information concerni…

What Constitutes Filing; Duration of Filing; Effect of Lapsed Filing; Duties of Filing Officer. (1) Presentation for filing of a financing statement and tender of the filing fee or acceptance of the statement by the filing officer constitutes filing under this division. (2) Excep…

Termination Statement. (1) If a financing statement covering consumer goods is filed on or after April 1, 1983, then within one month or within 10 days following written demand by the debtor after there is no outstanding secured obligation and no commitment to make advances, incu…

Assignment of Security Interest; Duties of Filing Officer; Fees. (1) A financing statement may disclose an assignment of a security interest in the collateral described in the financing statement by indication in the financing statement of the name and address of the assignee or …

Release of Collateral; Duties of Filing Officer; Fees. A secured party of record may by his signed statement release all or a part of any collateral described in a filed financing statement. The statement of release is sufficient if it contains a description of the collateral bei…

Information From Filing Officer. (1) If the person filing any financing statement, termination statement, statement of assignment, or statement of release, furnishes the filing officer a copy thereof, the filing officer shall upon request note upon the copy the file number and da…

Financing Statements Covering Consigned or Leased Goods. A consignor or lessor of goods may file a financing statement using the terms “consignor,” “consignee,” “lessor,” “lessee” or the like instead of the terms specified in 5 CMC § 9402. The provisions of this chapter shall app…

Recording on Microfilm. In lieu of filing all financing statements, termination statements, partial releases, assignments, or other related papers falling under this title, the filing officer may record such papers. He may employ a system of microphotography. All film used in the…