A person who transfers a negotiable instrument to someone else and for consideration makes five warranties to his immediate transferee.

Question

Quizplus · Accepted Answer

This statement is true. When a person transfers a negotiable instrument to someone else for consideration, they make five warranties to their immediate transferee. These warranties include (1) that the instrument is genuine and has not been altered, (2) that the person transferring the instrument has good title to it, (3) that there are no prior claims to the instrument, (4) that the instrument is not subject to any defenses or claims that could be made against the transferor, and (5) that the person transferring the instrument is not aware of any insolvency proceedings against the maker or acceptor of the instrument.

A Person Who Transfers a Negotiable Instrument to Someone Else