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 statement are true of warranty liability.

Question

Quizplus · Accepted Answer

All the statements (A, B, and C) accurately describe aspects of warranty liability in the context of negotiable instruments. Warranty liability indeed applies to any person who transfers an instrument for consideration (A), a drawee of an unaccepted draft who pays in good faith receives a presentment warranty from the person obtaining payment and all prior transferors (B), and a drawee who accepts an instrument in good faith receives a presentment warranty that the draft has not been altered (C).

Which of the Following Is True of Warranty Liability as It