(3-416) Transfer warranties
N.D. Cent. Code § 41-03-53
in effect41-03-53. (3-416) Transfer warranties
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 authorized.
c. The instrument has not been altered.
d. The instrument is not subject to a defense or claim in recoupment (subsection 1
of section 41-03-31) of any party which can be asserted against the warrantor.
e. The warrantor has no knowledge of any insolvency proceeding commenced with
respect to the maker or acceptor or, in the case of an unaccepted draft, the
drawer.
f. If the instrument is a demand draft, creation of the instrument according to the
terms on its face was authorized by the person identified as drawer.
2. A person to whom the warranties under subsection 1 are made and who took the
instrument in good faith may recover from the warrantor as damages for breach of
warranty an amount equal to the loss suffered as a result of the breach, but not more
than the amount of the instrument plus expenses and loss of interest incurred as a
result of the breach.
3. The warranties stated in subsection 1 may not 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 2 is discharged to the extent
of any loss caused by the delay in giving notice of the claim.
4. A cause of action for breach of warranty under this section accrues when the claimant
has reason to know of the breach.
5. If the warranty in subdivision f of subsection 1 is not given by a transferor under
applicable conflict of law rules, then the warranty is not given to that transferor when
that transferor is a transferee.
Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://ndlegis.gov/cencode/t41c03.pdf#nameddest=41-03-53Fetched: 10/16/2026