Warr Liability

Question 1

Is possession of the instrument needed to bring a claim for warranty liability?

Answer 1

No

Question 2

Is possession of the instrument needed to bring a claim for contract liability?

Answer 2

Yes

Question 3

True or false: Warranties are implied and arise automatically.

Answer 3

True - warranties are created by the transfer and presentment not by the indorsement.

Question 4

Who makes the transfer warranties?

Answer 4

The transferor who receives consideration for the instrument (the defendant)

Question 5

Do transfer warranties arise in a gift?

Answer 5

No - the person transferring must have received consideration before the transfer warranties are implied.

Question 6

What warranty is created when a party deposits a check into their account.

Answer 6

Transfer Warranty

Question 7

To whom are transfer warranties made?

Answer 7

Immediate Transferee

Subsequent transferees if the transferor has indorsed the document

Question 8

True or False: In banking, the liability runs to any subsequent collecting bank even without indorsement.

Answer 8

True

Question 9

Can drawees and makers sue for breach of transfer warranty?

Answer 9

No - because they get instruments presented to them for payment.

Question 10

True or False: Everytime you deposit a check, you make transfer warranties?

Answer 10

True

Question 11

What are the transfer warranties?

Answer 11

1) Warrantor is entitled to enforce the instrument - warranty of good title
2) All signatures are authorized and authentic
3) No Alteration
4) No good defenses against Transferor - transferor warrants that no defense raise could defeat transferor .
5) No knowledge of insolvency proceedings.

Question 12

Which of the transfer warranties is the warrantor’s lack of knowledge relevent?

Answer 12

Regarding whether they had knowledge of any insolvency proceedings.

Question 13

Can a check disclaim transfer warranties?

Answer 13

No

Question 14

Can a non-check instrument disclaim warranties?

Answer 14

Yes

Question 15

Can a party have both a claim for transfer warranty and presentment warranty?

Answer 15

No - they are mutually exclusive - argue both but only win on one.

Question 16

Who makes a presentment warranty?

Answer 16

Presenter and the previous transferors

Question 17

To whom is the presentment warranty made to?

Answer 17

Parties who pay in good faith - maker, drawee, or acceptor (if the instrument is certified)

Question 18

Do you make a presentment warranty when you cash a check?

Answer 18

Yes

Question 19

What are the presentment warranties?

Answer 19

1) Warrantor entitle to enforce draft or obtain payment (have good title)
2) No alteration
3) No knowledge of unauthorized drawers signature

Question 20

What is the warranty when other instruments are presented?

Answer 20

Note to maker; Dishonored draft to indorser - warrantor entitled to enforce draft or payment.

Question 21

If the Plaintiff is the holder and the payor has not paid the instrument, what should the plaintiff sue under?

Answer 21

Sue the indorser on the contract

Question 22

If the payor has paid and later discovers that the payor should not have paid (forgery, alteration, etc), what can the payor sue under?

Answer 22

Breach of warranty for transfer or presentment as appropriate under the facts.