§ 6A-3-416 - Transfer warranties.
SECTION 6A-3-416
§ 6A-3-416 Transfer warranties. – (a) A person who transfers an instrument for consideration warrants to thetransferee and, if the transfer is by indorsement, to any subsequent transfereethat:
(1) The warrantor is a person entitled to enforce theinstrument;
(2) All signatures on the instrument are authentic andauthorized;
(3) The instrument has not been altered;
(4) The instrument is not subject to a defense or claim inrecoupment of any party which can be asserted against the warrantor; and
(5) The warrantor has no knowledge of any insolvencyproceeding commenced with respect to the maker or acceptor or, in the case ofan unaccepted draft, the drawer.
(b) A person to whom the warranties under subsection (a) aremade and who took the instrument in good faith may recover from the warrantoras damages for breach of warranty an amount equal to the loss suffered as aresult of the breach, but not more than the amount of the instrument plusexpenses and loss of interest incurred as a result of the breach.
(c) The warranties stated in subsection (a) cannot bedisclaimed with respect to checks. Unless notice of a claim for breach ofwarranty is given to the warrantor within 30 days after the claimant has reasonto know of the breach and the identity of the warrantor, the liability of thewarrantor under subsection (b) is discharged to the extent of any loss causedby the delay in giving notice of the claim.
(d) A cause of action for breach of warranty under thissection accrues when the claimant has reason to know of the breach.