§ 25-8-306. Effect of guaranteeing signature, indorsement, or instruction. - North Carolina Statutes

§ 25‑8‑306. Effect of guaranteeing signature, indorsement, or instruction.

(a)        A person whoguarantees a signature of an indorser of a security certificate warrants thatat the time of signing:

(1)        The signature wasgenuine;

(2)        The signer was anappropriate person to indorse, or if the signature is by an agent, the agenthad actual authority to act on behalf of the appropriate person; and

(3)        The signer had legalcapacity to sign.

(b)        A person whoguarantees a signature of the originator of an instruction warrants that at thetime of signing:

(1)        The signature wasgenuine;

(2)        The signer was anappropriate person to originate the instruction, or if the signature is by anagent, the agent had actual authority to act on behalf of the appropriateperson, if the person specified in the instruction as the registered owner was,in fact, the registered owner, as to which fact the signature guarantor doesnot make a warranty; and

(3)        The signer had legalcapacity to sign.

(c)        A person whospecially guarantees the signature of an originator of an instruction makes thewarranties of a signature guarantor under subsection (b) of this section andalso warrants that at the time the instruction is presented to the issuer:

(1)        The person specifiedin the instruction as the registered owner of the uncertificated security willbe the registered owner; and

(2)        The transfer of theuncertificated security requested in the instruction will be registered by theissuer free from all liens, security interests, restrictions, and claims otherthan those specified in the instruction.

(d)        A guarantor undersubsections (a) and (b) of this section or a special guarantor under subsection(c) of this section does not otherwise warrant the rightfulness of thetransfer.

(e)        A person who guaranteesan indorsement of a security certificate makes the warranties of a signatureguarantor under subsection (a) of this section and also warrants therightfulness of the transfer in all respects.

(f)         A person whoguarantees an instruction requesting the transfer of an uncertificated securitymakes the warranties of a special signature guarantor under subsection (c) ofthis section and also warrants the rightfulness of the transfer in allrespects.

(g)        An issuer may notrequire a special guaranty of signature, a guaranty of indorsement, or aguaranty of instruction as a condition to registration of transfer.

(h)        The warrantiesunder this section are made to a person taking or dealing with the security inreliance on the guaranty, and the guarantor is liable to the person for lossresulting from their breach. An indorser or originator of an instruction whosesignature, indorsement, or instruction has been guaranteed is liable to aguarantor for any loss suffered by the guarantor as a result of breach of the warrantiesof the guarantor. (1899, c. 733, ss. 65 to 67, 69; Rev., ss. 2214 to2216, 2218; C.S., ss. 3046 to 3048, 3050; 1941, c. 353, ss. 11, 12; G.S., ss.55‑91, 55‑92; 1955, c. 1371, s. 2; 1965, c. 700, s. 1; 1989, c.588, s. 1; 1997‑181, s. 1.)