Notice of breach of fiduciary duty.

  1. Law
  2. Colorado Revised Statutes
  3. Uniform Commercial Code
  4. Negotiable Instruments
  5. Notice of breach of fiduciary duty.

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(a) In this section:

  1. "Fiduciary" means an agent, trustee, partner, corporate officer or director, or otherrepresentative owing a fiduciary duty with respect to an instrument.

  2. "Represented person" means the principal, beneficiary, partnership, corporation, orother person to whom the duty stated in paragraph (1) of this subsection (a) is owed.

(b) If (i) an instrument is taken from a fiduciary for payment or collection or for value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:

  1. Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person.

  2. In the case of an instrument payable to the represented person or the fiduciary assuch, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary or (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary.

  3. If an instrument is issued by the represented person or the fiduciary as such, andmade payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.

  4. If an instrument is issued by the represented person or the fiduciary as such, to thetaker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

Source: L. 94: Entire article R&RE, p. 857, § 1, effective January 1, 1995. L. 2000: (b)(2) amended, p. 1173, § 3, effective May 26.

Cross references: For registration, see part 4 of this article.


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