§ 6A-4-208 - Presentment warranties.
SECTION 6A-4-208
§ 6A-4-208 Presentment warranties. –(a) If an unaccepted draft is presented to the drawee for payment or acceptanceand the drawee pays or accepts the draft, (i) the person obtaining payment oracceptance, at the time of presentment, and (ii) a previous transferor of thedraft, at the time of transfer, warrant to the drawee that pays or accepts thedraft in good faith that:
(1) The warrantor is, or was, at the time the warrantortransferred the draft, a person entitled to enforce the draft or authorized toobtain payment or acceptance of the draft on behalf of a person entitled toenforce the draft;
(2) The draft has not been altered; and
(3) The warrantor has no knowledge that the signature of thepurported drawer of the draft is unauthorized.
(b) A drawee making payment may recover from a warrantordamages for breach of warranty equal to the amount paid by the drawee less theamount the drawee received or is entitled to receive from the drawer because ofthe payment. In addition, the drawee is entitled to compensation for expensesand loss of interest resulting from the breach. The right of the drawee torecover damages under this subsection is not affected by any failure of thedrawee to exercise ordinary care in making payment. If the drawee accepts thedraft (i) breach of warranty is a defense to the obligation of the acceptor,and (ii) if the acceptor makes payment with respect to the draft, the acceptoris entitled to recover from a warrantor for breach of warranty the amountsstated in this subsection.
(c) If a drawee asserts a claim for breach of warranty undersubsection (a) based on an unauthorized indorsement of the draft or analteration of the draft, the warrantor may defend by proving that theindorsement is effective under § 6A-3-404 or 6A-3-405 or the drawer isprecluded under § 6A-3-406 or 6A-4-406 from asserting against the draweethe unauthorized indorsement or alteration.
(d) If (i) a dishonored draft is presented for payment to thedrawer or an indorser or (ii) any other item is presented for payment to aparty obliged to pay the item, and the item is paid, the person obtainingpayment and a prior transferor of the item warrant to the person making paymentin good faith that the warrantor is, or was, at the time the warrantortransferred the item, a person entitled to enforce the item or authorized toobtain payment on behalf of a person entitled to enforce the item. The personmaking payment may recover from any warrantor for breach of warranty an amountequal to the amount paid plus expenses and loss of interest resulting from thebreach.
(e) The warranties stated in subsections (a) and (d) cannotbe disclaimed 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 warrantor isdischarged to the extent of any loss caused by the delay in giving notice ofthe claim.
(f) A cause of action for breach of warranty under thissection accrues when the claimant has reason to know of the breach.