A person who transfers an instrument for consideration makes transfer warranties to all subsequent transferees who take the instrument in good faith.

Question

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This is a true statement as per the Uniform Commercial Code (UCC) Section 3-416. When an instrument such as a check, promissory note, or negotiable instrument is transferred for consideration (i.e. money or value), the transferor makes certain transfer warranties to any subsequent transferees who take the instrument in good faith. These warranties include the authenticity of the instrument, the transferor's authority to transfer it, and that there are no claims or defenses against the instrument that would reduce its value.

A Person Who Transfers an Instrument for Consideration Makes Transfer