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A person who transfers an instrument for consideration warrants to all subsequent transferees and holders who take the instrument in good faith that all signatures on the item are authentic and authorized.
Consideration
The value (such as money, services, or goods) that is promised in a contract to be exchanged to make the contract legally binding.
Subsequent Transferees
Individuals or entities that receive property rights or interests from previous holders through a legal process of transfer.
Authentic
Genuine, original, and not a copy or imitation; true and accurate.
- Identify the situations that lead to warranty liability during the transfer of a negotiable instrument.
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Learning Objectives
- Identify the situations that lead to warranty liability during the transfer of a negotiable instrument.
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