Sec. 416. (a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by endorsement, to any subsequent transferee that:
(1) the warrantor is a person entitled to enforce the instrument;
(2) all signatures on the instrument are authentic and authorized;
(3) the instrument has not been altered;
(4) the instrument is not subject to a defense or claim in recoupment of any party which 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) A person to whom the warranties under subsection (a) are made and who took the instrument 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 instrument plus expenses and loss of interest incurred as a result of the breach.
(c) 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 liability of the warrantor under subsection (b) is discharged to the extent of any loss caused by the delay in giving notice of the claim.
(d) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
As added by P.L.222-1993, SEC.5. Amended by P.L.135-2009, SEC.9.
Structure Indiana Code
Article 1. Uniform Commercial Code
Chapter 3.1. Negotiable Instruments
26-1-3.1-104. Negotiable Instrument
26-1-3.1-105. Issue of Instrument
26-1-3.1-106. Unconditional Promise or Order
26-1-3.1-107. Instrument Payable in Foreign Money
26-1-3.1-108. Payable on Demand or at Definite Time
26-1-3.1-109. Payable to Bearer or to Order
26-1-3.1-110. Identification of Person to Whom Instrument Is Payable
26-1-3.1-111. Place of Payment
26-1-3.1-113. Date of Instrument
26-1-3.1-114. Contradictory Terms of Instrument
26-1-3.1-115. Incomplete Instrument
26-1-3.1-116. Joint and Several Liability; Contribution
26-1-3.1-117. Other Agreements Affecting Instrument
26-1-3.1-118. Statute of Limitations
26-1-3.1-119. Notice of Right to Defend Action
26-1-3.1-202. Negotiation Subject to Rescission
26-1-3.1-203. Transfer of Instrument; Rights Acquired by Transfer
26-1-3.1-205. Special Endorsement; Blank Endorsement; Anomalous Endorsement
26-1-3.1-206. Restrictive Endorsement
26-1-3.1-301. Person Entitled to Enforce Instrument
26-1-3.1-302. Holder in Due Course
26-1-3.1-303. Value and Consideration
26-1-3.1-304. Overdue Instrument
26-1-3.1-305. Defenses and Claims in Recoupment
26-1-3.1-306. Claims to an Instrument
26-1-3.1-307. Notice of Breach of Fiduciary Duty
26-1-3.1-308. Proof of Signatures and Status as Holder in Due Course
26-1-3.1-309. Enforcement of Lost, Destroyed, or Stolen Instrument
26-1-3.1-310. Effect of Instrument on Obligation for Which Taken
26-1-3.1-311. Accord and Satisfaction by Use of Instrument
26-1-3.1-312. Lost Check; Assertion of Claim to Obligated Bank
26-1-3.1-402. Signature by Representative
26-1-3.1-403. Unauthorized Signature
26-1-3.1-404. Impostors; Fictitious Payees
26-1-3.1-405. Employer's Responsibility for Fraudulent Endorsement by Employee
26-1-3.1-406. Negligence Contributing to Forged Signature or Alteration of Instrument
26-1-3.1-408. Drawee Not Liable on Unaccepted Draft
26-1-3.1-409. Acceptance of Draft; Certified Check
26-1-3.1-410. Acceptance Varying Draft
26-1-3.1-411. Refusal to Pay Cashier's Checks, Teller's Checks, and Certified Checks
26-1-3.1-412. Obligation of Issuer of Note or Cashier's Check
26-1-3.1-413. Obligation of Acceptor
26-1-3.1-414. Obligation of Drawer
26-1-3.1-415. Obligation of Endorser
26-1-3.1-416. Transfer Warranties
26-1-3.1-417. Presentment Warranties
26-1-3.1-418. Payment or Acceptance by Mistake
26-1-3.1-419. Instruments Signed for Accommodation
26-1-3.1-420. Conversion of Instrument
26-1-3.1-502.5. Surcharge After Dishonor
26-1-3.1-503. Notice of Dishonor
26-1-3.1-504. Excused Presentment and Notice of Dishonor
26-1-3.1-505. Evidence of Dishonor
26-1-3.1-601. Discharge and Effect of Discharge
26-1-3.1-603. Tender of Payment
26-1-3.1-604. Discharge by Cancellation or Renunciation
26-1-3.1-605. Release or Extension of an Obligor's Obligation