Transfer and presentment warranties shift the risk of loss to the party who was in the best position to prevent the loss.

Question

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Transfer and presentment warranties are designed to allocate the risk of loss in commercial transactions. These warranties shift the risk to the party who is in the best position to prevent the loss. For example, if a check is transferred, the transfer warranty shifts the risk of loss due to a forged or altered check to the transferring party because they were in the best position to prevent such a loss. Similarly, a presentment warranty shifts the risk of loss from an uncollectible check to the party who presents it for payment because they were in the best position to identify any issues with the check before presenting it.

Transfer and Presentment Warranties Shift the Risk of Loss to the Party