Test 1 (Presentment Warranties & Discharge)

Question 1

When do presentment warranties come into play?

Answer 1

When a primary party pays on an instrument and then later finds out that they shouldn’t have done so, and want to get the money back

Question 2

What are the three presentment warranties?

When do two and three apply?

Answer 2

1- The presenting party is entitled to enforce the instrument on behalf of himself or his principal

2- The instrument has not been altered

3- The presenting party has no knowledge that the issuer’s signature is unauthorized

2 & 3 only apply with checks that have not been accepted by drawees yet

Question 3

When is breach determined for presentment warranties?

Answer 3

At point of presentment, so things happening afterwards are irrelevant

Question 4

Is HDC status relevant for presentment warranty breaches?

Answer 4

no