Michigan Compiled Laws

Mich. Comp. Laws § 440.3416 (2026)

Transfer of instrument for consideration; endorsement; warranties.

✓ current as of July 2026

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UNIFORM COMMERCIAL CODE

Act 174 of 1962

440.3416 Transfer of instrument for consideration; endorsement; warranties.

Sec. 3416.

(1) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by endorsement, to any subsequent transferee all of the following:

(a) That the warrantor is a person entitled to enforce the instrument.

(b) That all signatures on the instrument are authentic and authorized.

(d) That the instrument is not subject to a defense or claim in recoupment of any party which can be asserted against the warrantor.

(e) That 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) With respect to a remotely created consumer item, that the person on whose account the item is drawn authorized the issuance of the item in the amount for which the item is drawn.

(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) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 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.

History: 1962, Act 174, Eff. Jan. 1, 1964 ;-- Am. 1993, Act 130, Eff. Sept. 30, 1993 ;-- Am. 2014, Act 101, Imd. Eff. Apr. 10, 2014

Notes of Decisions

Cited in 4 cases, 1972–2019 · leading case: Huntington Nat'l Bank v. McCann, 268 F. App'x 359 (5th Cir. 2008).

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Huntington Nat'l Bank v. McCann, 268 F. App'x 359 (5th Cir. 2008). · cites it 2× “Mich. Comp. Laws § 440.3416 (1) — (2) (Lex-isNexis 2008) (hereinafter MCL).”

Rassette v. Frankel, 197 N.W.2d 330 (Mich. Ct. App. 1972). · cites it 2× “Defendant Frankel was a guarantor, MCLA 440.3416 (1); MSA 19.3416(1). His liability was the same as a co-maker.”

In re Broucek, 341 B.R. 623 (Bankr. W.D. Mich. 2006). · cites it 6× “MCLA § 440.3416 and § 440.4207. The Bank relied upon these representations and warranties, processed the checks, and paid certified funds into the Pupler bank account.”

Web Equity Holdings LLC v. Level One Bancorp Inc (Mich. Ct. App. 2019). “The checks were deposited into Taymore-related accounts at Huntington, making that bank the “depositary bank.”

— Mich. Comp. Laws § 440.3416(1) — 1 case

Rassette v. Frankel, 197 N.W.2d 330 (Mich. Ct. App. 1972). “Defendant Frankel was a guarantor, MCLA 440.3416 (1); MSA 19.3416(1). His liability was the same as a co-maker.”

— Mich. Comp. Laws § 440.3416(1)(b) — 1 case

Web Equity Holdings LLC v. Level One Bancorp Inc (Mich. Ct. App. 2019). “The checks were deposited into Taymore-related accounts at Huntington, making that bank the “depositary bank.”

— Mich. Comp. Laws § 440.3416(1)(d) — 1 case

In re Broucek, 341 B.R. 623 (Bankr. W.D. Mich. 2006). “MCLA § 440.3416 and § 440.4207. The Bank relied upon these representations and warranties, processed the checks, and paid certified funds into the Pupler bank account.”

— Mich. Comp. Laws § 440.3416(2) — 1 case

Huntington Nat'l Bank v. McCann, 268 F. App'x 359 (5th Cir. 2008). “Mich. Comp. Laws § 440.3416 (1) — (2) (Lex-isNexis 2008) (hereinafter MCL).”

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