Ch. 91                                     1996 LAWS OF MARYLAND

3-416.

(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
WARRANTOR; AND

(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) 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.

3-417.

(A) IF AN UNACCEPTED DRAFT IS PRESENTED TO THE DRAWEE FOR
PAYMENT OR ACCEPTANCE AND THE DRAWEE PAYS OR ACCEPTS THE DRAFT, (I)
THE PERSON OBTAINING PAYMENT OR ACCEPTANCE, AT THE TIME OF
PRESENTMENT, AND (II) A PREVIOUS TRANSFEROR OF THE DRAFT, AT THE TIME OF
TRANSFER, WARRANT TO THE DRAWEE MAKING PAYMENT OR ACCEPTING 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

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