Warranty
Liability
Extends to both signers and
non-signers.
Breach of warranty can occur when
the instrument is transferred or presented for payment.
Transferors make certain implied
warranties regarding instruments they negotiate.
Liability not subject to
dishonor, presentment, notice.
Liabilities: Transfer or
Presentment.
Transfer
Warranties
Following transfer warranties
extend to all subsequent holders:
§ Transferor is
entitled to enforce the instrument.
§ Signatures are
authentic and authorized.
§ Instrument has
not been altered.
§ Instrument not
subject to defense.
§ Transferor has
no notice of insolvency.
Presentment
Warranties
Person who presents an instrument
makes the following presentment warranties:
§ No missing or
unauthorized indorsement.
§ Instrument has
not been altered.
§ Person obtaining
payment has no knowledge signature is unauthorized.
Case 26.3: First National Bank
of Chicago v. MidAmerica Federal Savings (1999).
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