A transferee who took an instrument in good faith may recover damages for breach of transfer warranty from the warrantor equal to the loss suffered.

Question

Quizplus · Accepted Answer

This is true under the Uniform Commercial Code (UCC), which provides certain transfer warranties for negotiable instruments, such as checks or promissory notes. A transferee who took the instrument in good faith and for value has the right to recover damages from the warrantor if the instrument turns out to be a forgery or is not enforceable for some other reason. The damages would be equal to the loss suffered by the transferee as a result of the breach of warranty.

A Transferee Who Took an Instrument in Good Faith May