Title 11, Chapter 3, Section 416
(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 instrument;
(2) All signatures on the instrument are authentic and authorized;
(3) The instrument has not been altered;
(4) The instrument is not subject to a defense or claim in
recoupment of any party which can be asserted against the
(5) The warrantor has no knowledge of any insolvency proceeding
commenced with respect to the maker or acceptor or, in the case of
an unaccepted draft, the drawer.
(b) A person to whom the warranties under subsection (a) of this
Code section 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) of this Code section
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) of this Code section 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 Code section
accrues when the claimant has reason to know of the breach.