§ 26-1-8.1-108 — Warranties upon purchase or transfer of security

Indiana § 26-1-8.1-108

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 8.1: Investment Securities

Text

(a) A person who transfers a certificated
security to a purchaser for value warrants to the purchaser, and an
endorser, if the transfer is by endorsement, warrants to any subsequent
purchaser, that:
(1) the certificate is genuine and has not been materially altered;
(2) the transferor or endorser does not know of any fact that might
impair the validity of the security;
(3) there is no adverse claim to the security;
(4) the transfer does not violate any restriction on transfer;
(5) if the transfer is by endorsement, the endorsement is made by
an appropriate person, or if the endorsement is by an agent, the
agent has actual authority to act on behalf of the appropriate
person; and
(6) the transfer is otherwise effective and rightful.
(b) A person who originates an instruction for registration of
transfer of an uncertificated security to a purchaser for value warrants
to the purchaser that:
(1) the instruction is made by an appropriate person, or if the
instruction is by an agent, the agent has actual authority to act on
behalf of the appropriate person;
(2) the security is valid;
(3) there is no adverse claim to the security; and
(4) at the time the instruction is presented to the issuer:
(i) the purchaser will be entitled to the registration of transfer;
(ii) the transfer will be registered by the issuer free from all
liens, security interests, restrictions, and claims other than those
specified in the instruction;
(iii) the transfer will not violate any restriction on transfer; and
(iv) the requested transfer will otherwise be effective and
rightful.
(c) A person who transfers an uncertificated security to a purchaser
for value and does not originate an instruction in connection with the
transfer warrants that:
(1) the uncertificated security is valid;
(2) there is no adverse claim to the security;
(3) the transfer does not violate any restriction on transfer; and
(4) the transfer is otherwise effective and rightful.
(d) A person who endorses a security certificate warrants to the
issuer that:
(1) there is no adverse claim to the security; and
(2) the endorsement is effective.
(e) A person who originates an instruction for registration of transfer
of an uncertificated security warrants to the issuer that:
(1) the instruction is effective; and
(2) at the time the instruction is presented to the issuer the
purchaser will be entitled to the registration of transfer.
(f) A person who presents a certificated security for registration of
transfer or for payment or exchange warrants to the issuer that the
person is entitled to the registration, payment, or exchange, but a
purchaser for value and without notice of adverse claims to whom
transfer is registered warrants only that the person has no knowledge
of any unauthorized signature in a necessary endorsement.
(g) If a person acts as agent of another in delivering a certificated
security to a purchaser, the identity of the principal was known to the
person to whom the certificate was delivered, and the certificate
delivered by the agent was received by the agent from the principal or
received by the agent from another person at the direction of the
principal, the person delivering the security certificate warrants only
that the delivering person has authority to act for the principal and does
not know of any adverse claim to the certificated security.
(h) A secured party who redelivers a security certificate received, or
after payment and on order of the debtor delivers the security certificate
to another person, makes only the warranties of an agent under
subsection (g).
(i) Except as otherwise provided in subsection (g), a broker acting
for a customer makes to the issuer and a purchaser the warranties
provided in subsections (a) through (f). A broker that delivers a
security certificate to its customer, or causes its customer to be
registered as the owner of an uncertificated security, makes to the
customer the warranties provided in subsection (a) or (b), and has the
rights and privileges of a purchaser under this section. The warranties
of and in favor of the broker acting as an agent are in addition to
applicable warranties given by and in favor of the customer.

Legislative History

As added by P.L.247-1995, SEC.10.