Which of the following is true of warranty liability as it affects negotiable instruments?
A) Warranty liability applies to any persons who transfer an instrument and receive consideration.
B) A drawee of an unaccepted draft who pays in good faith receives a presentment warranty from the person obtaining payment and from all prior transferors of the draft.
C) A drawee who accepts an instrument in good faith receives a presentment warranty from the person obtaining acceptance that the draft has not been altered.
D) All of these.
E) None of these.

Question

Quizplus · Accepted Answer

All three statements are true.

A) Warranty liability applies to any persons who transfer an instrument and receive consideration. This means that if someone transfers a negotiable instrument to another person and receives payment for it, they are warranting that the instrument is valid and enforceable.

B) A drawee of an unaccepted draft who pays in good faith receives a presentment warranty from the person obtaining payment and from all prior transferors of the draft. This means that if someone pays an unaccepted draft in good faith, they are entitled to a warranty from the person who received payment and from all prior transferors of the draft.

C) A drawee who accepts an instrument in good faith receives a presentment warranty from the person obtaining acceptance that the draft has not been altered. This means that if someone accepts a negotiable instrument in good faith, they are entitled to a warranty from the person who obtained acceptance that the instrument has not been altered.

Which of the Following Is True of Warranty Liability as It