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 who accepts an instrument in good faith receives a presentment warranty from the person obtaining acceptance that the draft has not been altered.
C) 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.
D) All of these.

Question

Quizplus · Accepted Answer

Warranty liability in the context of negotiable instruments applies in various situations. A) is true because anyone who transfers an instrument and receives consideration for it makes certain warranties to the transferee. B) is correct because a drawee who accepts an instrument in good faith is warranted by the presenter that the draft has not been altered (among other warranties). C) is also true because a drawee of an unaccepted draft who pays the draft in good faith receives presentment warranties not only from the person obtaining payment but also from all prior transferors. Therefore, all of these statements are correct, making D the right choice.

Which of the Following Is True of Warranty Liability as It