If a fiduciary draws a check or other bill of exchange in the name of the fiduciary's principal and the fiduciary has authority to draw the check or other bill of exchange that is payable to the fiduciary or a person that transfers the payment to the fiduciary, the person to which the check or other bill of exchange is paid:

1. (1) is not bound to inquire as to whether the fiduciary is committing a breach of the fiduciary's obligation in transferring the check or other bill of exchange to the fiduciary; and

2. (2) is not required to provide notice that the fiduciary is committing a breach of the fiduciary's obligation, unless the person:

   1. (a) takes the check or other bill of exchange with actual knowledge that the fiduciary is committing a breach of the fiduciary's obligation; or
   2. (b) knows that taking the check or other bill of exchange amounts to bad faith.

Renumbered and Amended by Chapter 364, 2024 General Session