An Act Making Amendments to the Uniform Commercial Code Covering Provisions Dealing with Negotiable Instruments and Bank Deposits and Collections
Maine Legislature, Session 121, LD 1786
Committee: Insurance and Financial Services
Sponsors: O'NEIL, MAYO, LaFOUNTAIN
Amends: 11 MRSA §3, 11 MRSA §4

Legislative Document 
No. 1786 
H.P.1308 
House of Representatives, December 22,2003 
An Act Making Amendments to the Uniform Commercial Code 
Covering Provisions Dealing with Negotiable Instruments and Bank 
Deposits and Collections 
Approved for introduction by a majority of the Legislative Council pursuant to Joint Rule 
203. 
Received by the Clerk of the House on December 17, 2003. Referred to the Committee on 
Insurance and Financial Services pursuant to Joint Rule 308.2 and ordered printed pursuant to 
Joint Rule 401. 
Presented by Representative O'NEIL of Saco. 
Cosponsored by Senator MAYO of Sagadahoc and 
Senator: LaFOUNTAIN of York. 
Printed on recycled paper 
7?'l~ /J1·711~ 
MILLICENT M. MacFARLAND 
Clerk 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 11 MRSA §3·1103. sub-§(I), "(a-l) and (a-2) are enacted 
to read: 
(a-ll 
"Consumer account" means an account established by an 
individual 
primarily 
for 
personal, 
family 
or 
household 
purposes. 
(a-2) 
"Consumer transaction" means a transaction in which 
an individual incurs an obligation primarily for personal, 
family or household purposes. 
Sec. 2. 11 MRS A §3-1103, sub-§(I), ,(1) is enacted to read: 
(1) 
"Remotely created consumer item" means an item drawn on 
a consumer account that is not created by the payor bank and 
does not bear a handwritten signature purporting to be the 
signature of the drawer. 
Sec. 3. 11 MRSA §3-1416. sub-§(I). '~(d) and (e) as enacted by PL 
1993, c. 293, Pt. A, §2, are amended to read: 
(d) 
The instrument is not subject to a defense or claim in 
recoupment of any party that may be asserted against the 
warrantor; 
(e) 
The 
proceeding 
or, in the 
alia 
warrantor 
has 
no 
knowledge 
of 
any 
insolvency 
commenced with respect to the maker or acceptor 
case of an unaccepted draft, the drawerT; and 
Sec. 4. 11 MRS A §3.1416, sub-§(l), ,(f) is enacted to read: 
(f) 
With respect to a remotely created consumer item, the 
person on whose account the item is drawn authorized the 
issuance of the item in the amount for which the item is 
drawn. 
Uniform Comments 
8. 
Subsection (a) ( 6 ) [Maine subsection (1) ( f)] is based on 
a 
number of nonuniform amendments designed to address concerns 
about certain kinds of check fraud. 
The provision implements a 
limited rejection of Price v. Neal, 97 Eng. Rep. 871 (K.B. 1762), 
so 
that 
in 
certain 
circumstances 
(those 
involving 
remotely 
created consumer checks) the payor bank can use a warranty claim 
to absolve itself of responsibility for honoring an unauthorized 
item. 
The 
prov~s~on rests on the premise that monitoring by 
depositary banks can control this type of fraud more effectively 
than 
any 
practices 
readily 
available 
to 
payor 
banks. 
The 
Page l-LR2358(1) 
provlslon expressly includes both the case in which the consumer 
does not authorize the item at all and also the case in which the 
consumer authorizes the item but in an amount different from the 
amount in which the item is drawn. 
Similar provisions appear in 
Section 3-417, 4-207, and 4-208 [Maine sections 3-1417, 4-207-A, 
and 4-207-BJ. 
The 
provision 
supplements 
applicable 
federal 
law, 
which 
requires 
telemarketers 
who 
submit 
instruments 
for 
payment 
to 
obtain the customer's "express verifiable authorization," which 
may be either in writing or tape recorded and must be made 
available upon request to the customer's bank. 
Federal Trade 
Commission's Telemarketing Sales Rule, 
C.F.R. §310.3(a)(3), 
implementing 
the 
Telemarketing 
and 
Consumer 
Fraud 
and 
Abuse 
Prevention Act, 
U.S.C. 
§§6101-6108. 
Some states also have 
consumer-protection laws governing authorization of instruments 
in telemarketing transactions. 
See, e.g., 9 Vt. Stat. Ann. §2464. 
Sec. 5. 11 MRSA §3-1417, sub-§(I}, 1f1f(b) and (c), as enacted by PL 
1993, c. 293, Pt. A, §2 are amended to read: 
(b) 
The draft has not been altered; aHa 
(c) 
The warrantor has no knowledge that the signature of 
the drawer of the draft is unauthorizedT; and 
Sec. 6. 11 MRS A §3-1417, sub-§(I), 1f(d) is enacted to read: 
(d) 
With respect to any remotely created consumer item, the 
person on whose account the item is drawn authorized the 
issuance of the item in the amount for which the item is 
drawn. 
Uniform Comments 
9. 
For discussion of subsection (a) (4) 
[Maine subsection 
(1) (d)J, see Comment 8 to Section 3-416 [Maine section 3-1416J. 
Sec. 7. 11 MRSA §4-104. sub-§(3), as amended by PL 1993, c. 
293, Pt. B, §9, is further amended to read: 
( 3 ) 
The following definitions in other Articles apply to 
this Article: 
"Acceptance." 
Section 3-1409. 
"Alteration." 
Section 3-1407. 
"Cashier's check." 
Section 3-1104. 
"Certificate of deposit." 
Section 3-1104. 
"Certified Check." 
Section 3-1409. 
"Check." 
Section 3-1104. 
"Draft." 
Section 3-1104. 
"Good faith." 
Section 3-1103. 
"Holder in due course." 
Section 3-1102. 
"Instrument." 
Section 3-1104. 
"Notice of dishonor." 
Section 3-1503. 
"Order." 
Section 3-1103. 
"Ordinary care." 
Section 3-1103. 
"Person entitled to enforce." 
Section 3-1301. 
"Presentment." 
Section 3-1501. 
"Promise. " 
"Prove." 
Section 
Section 
3-1103. 
3-1103. 
"Remotely created consumer item." 
Section 3-1103. 
"Teller's check." 
Section 3-1104. 
"Unauthorized signature .... 
Section 3-1403. 
Sec. 8. 11 MRSA §4.207.A, sub·§(l), 1[1[(d) and (e), as enacted by 
PL 1993, c. 293, Pt. B, §25, are amended to read: 
(d) 
The item is not subject to 
a 
defense or 
recoupment (section 3-1305, 
subsection 
(1» 
of 
that can be asserted against the warrantor; aa4 
claim in 
any party 
(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 drawerT; and 
Sec. 9. 11 MRSA §4·207·A, sub·§(l), 1[(0 is enacted to read: 
(f) 
With respect to any remotely created consumer item, the 
person on whose account the item is drawn authorized the 
issuance of the item in the amount for which the item is 
drawn. 
Uniform Comments 
[Change existing comment to comment 1.) 
2. 
For 
subsection 
(1) 
section 3-1416]. 
an 
explanation 
of 
(f»), 
see 
comment 
subsection 
(a)(6) 
to 
Section 3-416 
[Maine 
[Maine 
Sec. 10. 11 MRS A §4.207.B, sub·§(I), 1[1[(b) and (c), as enacted by 
PL 1993, c. 293, Pt. B, §26, are amended to read: 
(b) 
The draft has not been altered; aa4 
(c) 
The warrantor has no knowledge that the signature of 
the purported drawer of the draft is unauthorizedT: and 
Sec. 11. 11 MRSA §4-207-B, sub-§(l), 1f(d) is enacted to read: 
(d) 
With respect to any remotely created consumer item, the 
person on whose account the item is drawn authorized the 
issuance of the item in the amount for which the item is 
drawn. 
Uniform Comments 
[Change existing comment to comment 1.J 
2. 
For 
an 
explanation 
of 
subsection 
(a) (4) 
[Maine 
subsection (l)(d)J, see comment 8 to Section 3-416 [Maine section 
3-l4l6J. 
SUMMARY 
Several 
states 
have 
adopted 
nonuniform 
amendments 
to 
Articles 3 and 4 of the Uniform Commercial Code dealing with the 
responsibility for unauthorized telephone-generated checks. 
In 
2002, the National Conference of Commissioners on Uniform State 
Laws 
(NCCUSL) 
adopted amendments 
to Articles 
and 
of the 
Uniform Commercial Code. 
Those amendments include new warranties 
that generally place 
the 
responsibility 
for 
such 
checks 
on 
deposi tary banks rather than on payor banks. 
This bill amends 
Articles 
3-A 
and 
of 
the Maine 
Uniform Commercial 
Code 
to 
incl ude such warranties adopted by NCCUSL. 
The warranties are 
limited to items that are drawn on a consumer account and do not 
bear a manual signature.