§12A-3-416.

§12A-3-416.
   
                            TRANSFER WARRANTIES
                                      
   (a) A person who transfers an instrument for consideration warrants to
   the transferee and, if the transfer is by indorsement, to any
   subsequent transferee that:
   
   (1) The warrantor is a person entitled to enforce the instrument;
   
   (2) All signatures on the instrument are authentic and authorized;
   
   (3) The instrument has not been altered;
   
   (4) The instrument is not subject to a defense or claim in recoupment
   of any party which can be asserted against the warrantor; and
   
   (5) The warrantor has no knowledge of any insolvency proceeding
   commenced with respect to the maker or acceptor or, in the case of an
   unaccepted draft, the drawer.
   
   (b) A person to whom the warranties under subsection (a) of this
   section are made and who took the instrument in good faith may recover
   from the warrantor as damages for breach of warranty an amount equal
   to the loss suffered as a result of the breach, but not more than the
   amount of the instrument plus expenses and loss of interest incurred
   as a result of the breach.
   
   (c) The warranties stated in subsection (a) of this section cannot be
   disclaimed with respect to checks. Unless notice of a claim for breach
   of warranty is given to the warrantor within thirty (30) days after
   the claimant has reason to know of the breach and the identity of the
   warrantor, the liability of the warrantor under subsection (b) of this
   section is discharged to the extent of any loss caused by the delay in
   giving notice of the claim.
   
   (d) A claim for relief for breach of warranty under this section
   accrues when the claimant has reason to know of the breach.