Indiana § 26-1-4-207 Transfer warranties

Indiana Statutes

§ 26-1-4-207 — Transfer warranties

Indiana § 26-1-4-207

Title 26COMMERCIAL LAW

Art. 1UNIFORM COMMERCIAL CODE

Ch. 4Bank Deposits and Collections

This text of Indiana § 26-1-4-207 (Transfer warranties) is published on Counsel Stack Legal Research, covering Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Ind. Code § 26-1-4-207 (2026).

Text

(a)A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants to the transferee and to any subsequent collecting bank that:

(1)the warrantor is a person entitled to enforce the item;

(2)all signatures on the item are authentic and authorized;

(3)the item has not been altered;

(4)the item is not subject to a defense or claim in recoupment (IC 26-1-3.1-305(a)) of any party that can be asserted against the warrantor;

(5)the warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer; and

(6)with respect to a remotely-created consumer item, the person on whose account the item is drawn authorized the issuance of the item in the amount for whi

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(a) A customer or collecting bank that
transfers an item and receives a settlement or other consideration
warrants to the transferee and to any subsequent collecting bank that:
(1) the warrantor is a person entitled to enforce the item;
(2) all signatures on the item are authentic and authorized;
(3) the item has not been altered;
(4) the item is not subject to a defense or claim in recoupment (IC 26-1-3.1-305(a)) of any party that can be asserted against the
warrantor;
(5) the warrantor has no knowledge of any insolvency proceeding
commenced with respect to the maker or acceptor or, in the case
of an unaccepted draft, the drawer; and
(6) with respect to a remotely-created consumer item, the person
on whose account the item is drawn authorized the issuance of the
item in the amount for which the item is drawn.
(b) If an item is dishonored, a customer or collecting bank
transferring the item and receiving settlement or other consideration is
obliged to pay the amount due on the item:
(1) according to the terms of the item at the time it was
transferred; or
(2) if the transfer was of an incomplete item, according to its
terms when completed as stated in IC 26-1-3.1-115 and IC 26-1-3.1-407.
The obligation of a transferor is owed to the transferee and to any
subsequent collecting bank that takes the item in good faith. A
transferor cannot disclaim its obligation under this subsection by an
endorsement stating that it is made "without recourse" or otherwise
disclaiming liability.
(c) A person to whom the warranties under subsection (a) are made
and who took the item in good faith may recover from the warrantor as
damages for breach of warranty an amount equal to the loss suffered as
a result of the breach, but not more than the amount of the item plus
expenses and loss of interest incurred as a result of the breach.
(d) The warranties stated in subsection (a) cannot be disclaimed
with respect to checks. Unless notice of a claim for breach of warranty
is given to the warrantor within thirty (30) days after the claimant has
reason to know of the breach and the identity of the warrantor, the
warrantor is discharged to the extent of any loss caused by the delay in
giving notice of the claim.
(e) A cause of action for breach of warranty under this section
accrues when the claimant has reason to know of the breach.
Formerly: Acts 1963, c.317, s.4-207. As amended by
P.L.222-1993, SEC.23; P.L.135-2009, SEC.16.