                                 CODE OF VIRGINIA

NOTICE OF BREACH OF FIDUCIARY DUTY (§ 8.3A-307)

a. In this section:

   1. &#8220;Fiduciary&#8221; means an agent, trustee, partner, corporate officer
   or director, or other representative owing a fiduciary duty with respect to an
   instrument.

   2. &#8220;Represented person&#8221; means the principal, beneficiary,
   partnership, corporation, or other person to whom the duty stated in paragraph
   (1) 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 as such, 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.

   3. If an instrument is issued by the represented person or the fiduciary as
   such, and made 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 the taker 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.

HISTORY: Code 1950, § 6-408; 1964, c. 219, § 8.3-304; 1992, c. 693.