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(810 ILCS 5/3-416) (from Ch. 26, par. 3-416)
Sec. 3-416.
Transfer warranties.
(a) A person who transfers an instrument for consideration warrants to
the transferee and, if the transfer is by indorsement, to any subsequent
transferee that:
(1) the warrantor is a person entitled to enforce the |
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(2) all signatures on the instrument are authentic
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(3) the instrument has not been altered,
(4) the instrument is not subject to a defense or
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| claim in recoupment of any party which can be asserted against the warrantor, and
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(5) the warrantor has no knowledge of any insolvency
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| proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
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(b) A person to whom the warranties under subsection (a) are made and
who took the instrument in good faith may recover from the warrantor as
damages for breach of warranty an amount equal to the loss suffered as a
result of the breach, but not more than the amount of the instrument plus
expenses and loss of interest incurred as a result of the breach.
(c) The warranties stated in subsection (a) cannot be disclaimed with
respect to checks. Unless notice of a claim for breach of warranty is
given to the warrantor within 30 days after the claimant has reason to know
of the breach and the identity of the warrantor, the liability of the
warrantor under subsection (b) is discharged to the extent of any loss
caused by the delay in giving notice of the claim.
(d) A cause of action for breach of warranty under this Section accrues
when the claimant has reason to know of the breach.
(Source: P.A. 87-582; 87-1135.)
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