Drawee Bank Recovery from Prior Transferor

Question 1

Presentment warranties

Answer 1

1) made by presenter (potential defendants) and all prior transferors
2) run to drawee or maker
3) REMEMBER: every party that transfers a check makes a presentment warranty to the final payor bank

Question 2

Presentment Warranties: Check elements

Answer 2

1) good title
2) no material breach
3) no knowledge drawer’s signature is unauthorized
4) if remotely created item, that person identified as the drawer authorized the check

Question 3

Presentment Warranties: Note elements

Answer 3

1) good title

thats all folks

Question 4

Presentment Warranties: Breach

Answer 4

1) forged drawer’s signature: payment is USUALLY FINAL and payor bank loses UNLESS it can demonstrate that prior transferor had knowledge that drawer’s signature was unauthorized.
2) forged indorsement: payment NOT FINAL and bank may recover from the party that presented the instrument or any prior transferor