Transfer Warranty of Negotiable Instrument

The video tutorial explains the concept of warranty rights in financial instruments, focusing on the rights of the transferee to seek payment if an instrument is dishonored. It outlines the warranties a transferor provides, such as having good title and valid signatures, and the conditions under which these warranties apply. The tutorial also discusses the limitations of warranty liability, emphasizing that it only applies to the immediate transferor.

What is the primary purpose of a transfer warranty?

• To guarantee the instrument will never be dishonored

• To ensure the transferor receives payment

• To ensure the transferee can seek payment if the instrument is dishonored

• To provide a refund to the transferee

Which of the following is NOT a warranty provided by the transferor?

• No known defenses against payment

• Guaranteed payment of the instrument

• Right to enforce the instrument

• Good title to the instrument

What does the transferor warrant regarding the signatures on the instrument?

• All signatures are authorized and valid

• All signatures are witnessed

• All signatures are from the same person

• All signatures are notarized

Under what condition do transfer warranties apply?

• Only if the transferee provides value in exchange for the instrument

• Only if the instrument is dishonored

• Only if the transferor is insolvent

• Only if the transferee is a bank

Who is liable under transfer warranties?

• All previous transferors

• The original issuer of the instrument

• Only the immediate transferor

• The final holder of the instrument