§ 6A-8-108 - Warranties in direct holding.
SECTION 6A-8-108
§ 6A-8-108 Warranties in direct holding.– (a) A person who transfers a certificated security to a purchaser for valuewarrants to the purchaser, and an indorser, if the transfer is by indorsement,warrants to any subsequent purchaser, that:
(1) the certificate is genuine and has not been materiallyaltered;
(2) the transferor or indorser does not know of any fact thatmight impair the validity of the security;
(3) there is no adverse claim to the security;
(4) the transfer does not violate any restriction on transfer;
(5) if the transfer is by indorsement, the indorsement ismade by an appropriate person, or if the indorsement is by an agent, the agenthas actual authority to act on behalf of the appropriate person; and
(6) the transfer is otherwise effective and rightful.
(b) A person who originates an instruction for registrationof transfer of an uncertificated security to a purchaser for value warrants tothe purchaser that:
(1) the instruction is made by an appropriate person, or ifthe instruction is by an agent, the agent has actual authority to act on behalfof the appropriate person;
(2) the security is valid;
(3) there is no adverse claim to the security; and
(4) at the time the instruction is presented to the issuer:
(i) the purchaser will be entitled to the registration oftransfer;
(ii) the transfer will be registered by the issuer free fromall liens, security interests, restrictions, and claims other than thosespecified in the instruction;
(iii) the transfer will not violate any restriction ontransfer; and
(iv) the requested transfer will otherwise be effective andrightful.
(c) A person who transfers an uncertificated security to apurchaser for value and does not originate an instruction in connection withthe transfer warrants that:
(1) the uncertificated security is valid;
(2) there is no adverse claim to the security;
(3) the transfer does not violate any restriction ontransfer; and
(4) the transfer is otherwise effective and rightful.
(d) A person who indorses a security certificate warrants tothe issuer that:
(1) there is no adverse claim to the security; and
(2) the indorsement is effective.
(e) A person who originates an instruction for registrationof transfer of an uncertificated security warrants to the issuer that:
(1) the instruction is effective; and
(2) at the time the instruction is presented to the issuerthe purchaser will be entitled to the registration of transfer.
(f) A person who presents a certificated security forregistration of transfer or for payment or exchange warrants to the issuer thatthe person is entitled to the registration, payment, or exchange, but apurchaser for value and without notice of adverse claims to whom transfer isregistered warrants only that the person has no knowledge of any unauthorizedsignature in a necessary indorsement.
(g) If a person acts as agent of another in delivering acertificated security to a purchaser, the identity of the principal was knownto the person to whom the certificate was delivered, and the certificatedelivered by the agent was received by the agent from the principal or receivedby the agent from another person at the direction of the principal, the persondelivering the security certificate warrants only that the delivering personhas authority to act for the principal and does not know of any adverse claimto the certificated security.
(h) A secured party who redelivers a security certificatereceived, or after payment and on order of the debtor delivers the securitycertificate to another person, makes only the warranties of an agent undersubsection (g).
(i) Except as otherwise provided in subsection (g), a brokeracting for a customer makes to the issuer and a purchaser the warrantiesprovided in subsections (a) through (f). A broker that delivers a securitycertificate to its customer, or causes its customer to be registered as theowner of an uncertificated security, makes to the customer the warrantiesprovided in subsection (a) or (b), and has the rights and privileges of apurchaser under this section. The warranties of and in favor of the brokeracting as an agent are in addition to applicable warranties given by and infavor of the customer.