§ 25-3-416. Transfer warranties. - North Carolina Statutes

§25‑3‑416.  Transfer warranties.

(a)        A person whotransfers an instrument for consideration warrants to the transferee and, ifthe transfer is by indorsement, to any subsequent transferee that:

(1)        The warrantor is aperson entitled to enforce the instrument;

(2)        All signatures onthe instrument are authentic and authorized;

(3)        The instrument hasnot been altered;

(4)        The instrument isnot subject to a defense or claim in recoupment of any party which can beasserted against the warrantor; and

(5)        The warrantor has noknowledge of any insolvency proceeding commenced with respect to the maker oracceptor or, in the case of an unaccepted draft, the drawer.

(b)        A person to whomthe warranties under subsection (a) of this section are made and who took theinstrument in good faith may recover from the warrantor as damages for breachof warranty an amount equal to the loss suffered as a result of the breach, butnot more than the amount of the instrument plus expenses and loss of interestincurred as a result of the breach.

(c)        The warrantiesstated in subsection (a) of this section cannot be disclaimed with respect tochecks. Unless notice of a claim for breach of warranty is given to thewarrantor within 30 days after the claimant has reason to know of the breachand the identity of the warrantor, the liability of the warrantor undersubsection (b) of this section is discharged to the extent of any loss causedby the delay in giving notice of the claim.

(d)        A cause of actionfor breach of warranty under this section accrues when the claimant has reasonto know of the breach. (1899, c. 733, ss. 65, 69; Rev., ss, 2214, 2218; C.S.ss. 3046, 3050; 1965, c. 700, s. 1; 1995, c. 232, s. 1.)