Title 11, Chapter 4, Section 208
(a) If an unaccepted draft is presented to the drawee for payment or
acceptance and the drawee pays or accepts the draft, the person
obtaining payment or acceptance at the time of presentment and a
previous transferor of the draft at the time of transfer warrant to
the drawee that pays or accepts the draft in good faith that:
(1) The warrantor is, or was, at the time the warrantor
transferred the draft, a person entitled to enforce the draft or
authorized to obtain payment or acceptance of the draft on behalf
of a person entitled to enforce the draft;
(2) The draft has not been altered; and
(3) The warrantor has no knowledge that the signature of the
purported drawer of the draft is unauthorized.
(b) A drawee making payment may recover from a warrantor damages for
breach of warranty equal to the amount paid by the drawee less the
amount the drawee received or is entitled to receive from the drawer
because of the payment. In addition, the drawee is entitled to
compensation for expenses and loss of interest resulting from the
breach. The right of the drawee to recover damages under this
subsection is not affected by any failure of the drawee to exercise
ordinary care in making payment. If the drawee accepts the draft,
breach of warranty is a defense to the obligation of the acceptor.
If the acceptor makes payment with respect to the draft, the
acceptor is entitled to recover from a warrantor for breach of
warranty the amounts stated in this subsection.
(c) If a drawee asserts a claim for breach of warranty under subsection (a) of this Code section based on an unauthorized indorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the indorsement is effective under Code Section 11-3-404 or 11-3-405 or the drawer is precluded under Code Section 11-3-406 or 11-4-406 from asserting against the drawee the unauthorized indorsement or alteration.
(d) If a dishonored draft is presented for payment to the drawer or
an indorser or any other item is presented for payment to a party
obliged to pay the item and the item is paid, the person obtaining
payment and a prior transferor of the item warrant to the person
making payment in good faith that the warrantor is, or was, at the
time the warrantor transferred the item, a person entitled to
enforce the item or authorized to obtain payment on behalf of a
person entitled to enforce the item. The person making payment may
recover from any warrantor for breach of warranty an amount equal to
the amount paid plus expenses and loss of interest resulting from
(e) The warranties stated in subsections (a) and (b) 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 warrantor is discharged to the extent
of any loss caused by the delay in giving notice of the claim.
(f) A cause of action for breach of warranty under this Code section
accrues when the claimant has reason to know of the breach.