Warr Liability Flashcards
Is possession of the instrument needed to bring a claim for warranty liability?
No
Is possession of the instrument needed to bring a claim for contract liability?
Yes
True or false: Warranties are implied and arise automatically.
True - warranties are created by the transfer and presentment not by the indorsement.
Who makes the transfer warranties?
The transferor who receives consideration for the instrument (the defendant)
Do transfer warranties arise in a gift?
No - the person transferring must have received consideration before the transfer warranties are implied.
What warranty is created when a party deposits a check into their account.
Transfer Warranty
To whom are transfer warranties made?
Immediate Transferee
Subsequent transferees if the transferor has indorsed the document
True or False: In banking, the liability runs to any subsequent collecting bank even without indorsement.
True
Can drawees and makers sue for breach of transfer warranty?
No - because they get instruments presented to them for payment.
True or False: Everytime you deposit a check, you make transfer warranties?
True
What are the transfer warranties?
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.
Which of the transfer warranties is the warrantor’s lack of knowledge relevent?
Regarding whether they had knowledge of any insolvency proceedings.
Can a check disclaim transfer warranties?
No
Can a non-check instrument disclaim warranties?
Yes
Can a party have both a claim for transfer warranty and presentment warranty?
No - they are mutually exclusive - argue both but only win on one.
Who makes a presentment warranty?
Presenter and the previous transferors
To whom is the presentment warranty made to?
Parties who pay in good faith - maker, drawee, or acceptor (if the instrument is certified)
Do you make a presentment warranty when you cash a check?
Yes
What are the presentment warranties?
1) Warrantor entitle to enforce draft or obtain payment (have good title)
2) No alteration
3) No knowledge of unauthorized drawers signature
What is the warranty when other instruments are presented?
Note to maker; Dishonored draft to indorser - warrantor entitled to enforce draft or payment.
If the Plaintiff is the holder and the payor has not paid the instrument, what should the plaintiff sue under?
Sue the indorser on the contract
If the payor has paid and later discovers that the payor should not have paid (forgery, alteration, etc), what can the payor sue under?
Breach of warranty for transfer or presentment as appropriate under the facts.
