Colin signs a note "payable to the order of Debit Bank." The bank indorses the note in blank and negotiates it to Equity Funds, which sells it to Financial Investments. The transfer of the note from Equity to Financial gives rise to
A)none of the choices.
B)contractual liability.
C)signature liability.
D)warranty liability.

Question

Quizplus · Accepted Answer

The transfer of the note from Equity to Financial gives rise to warranty liability. When a note is transferred, the transferor (in this case, Equity Funds) automatically provides certain warranties to the transferee (Financial Investments), such as the fact that the note is genuine, that they have the right to transfer it, and that there are no defenses or claims against it by others.

Colin Signs a Note "Payable to the Order of Debit