Development Corporation obtains a business loan from Equity LLC in exchange for a note signed by the borrower. Equity alters the amount due on the note before selling it to Finance Inc., which takes it in good faith, and in turn sells it to Grande Invest Company. Grande can sue for breach of a warranty on the note

Question

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Grande can sue for breach of a warranty on the note as soon as it has reason to know of the breach, regardless of whether the payment is due or whether Finance Inc. had reason to suspect the breach. This is because warranties on negotiable instruments, like the note in question, are generally considered breached when the holder becomes aware of the breach, allowing them to take action immediately.

Development Corporation Obtains a Business Loan from Equity LLC in Exchange