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Can you summarize KYRS 355.3-416?
Negotiable Instruments > Transfer warranties.
Short Summary
This legal document pertains to transfer warranties for negotiable instruments. It states that a person who transfers an instrument for consideration warrants to the transferee and subsequent transferees that they are entitled to enforce the instrument, all signatures on the instrument are authentic and authorized, the instrument has not been altered, and the instrument is not subject to any defense or claim in recoupment. The warrantor also warrants that they have no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor, and in the case of an unaccepted draft, the drawer. Additionally, with respect to a remotely created item, the warrantor warrants that the person on whose account the item is drawn authorized its issuance. A person who took the instrument in good faith and to whom these warranties are made may recover damages for breach of warranty. However, the warranties cannot be disclaimed with respect to checks. Notice of a claim for breach of warranty must be given to the warrantor within thirty days after the claimant has reason to know of the breach and the identity of the warrantor, otherwise, the warrantor’s liability is discharged to the extent of any loss caused by the delay in giving notice. The claim for relief for breach of warranty accrues when the claimant has reason to know of the breach.
Whom does it apply to?
Persons who transfer negotiable instruments for consideration
What does it govern?
Transfer warranties
What are exemptions?
The warranties stated in subsection (1) cannot be disclaimed with respect to checks.
What are the Penalties?
Damages for breach of warranty can be recovered, but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.
Jurisdiction
Kentucky