PARRIS N. GLENDENING, Governor                               Ch. 91

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 DRAWER OF THE DRAFT IS UNAUTHORIZED.

(B)     A DRAWEE MAKING PAYMENT MAY RECOVER FROM ANY 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 ANY 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) 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 § 3-404 OR § 3-405 OR THE DRAWER IS
PRECLUDED UNDER § 3-406 OR § 4-406 FROM ASSERTING AGAINST THE DRAWEE THE
UNAUTHORIZED INDORSEMENT OR ALTERATION.

(D)    IF (I) A DISHONORED DRAFT IS PRESENTED FOR PAYMENT TO THE
DRAWER OR AN INDORSER OR (II) ANY OTHER INSTRUMENT IS PRESENTED FOR
PAYMENT TO A PARTY OBLIGED TO PAY THE INSTRUMENT, AND (III) PAYMENT IS
RECEIVED, THE FOLLOWING RULES APPLY:

(1)     THE PERSON OBTAINING PAYMENT AND A PRIOR TRANSFEROR OF
THE INSTRUMENT WARRANT TO THE PERSON MAKING PAYMENT IN GOOD FAITH
THAT THE WARRANTOR IS, OR WAS, AT THE TIME THE WARRANTOR TRANSFERRED
THE INSTRUMENT, A PERSON ENTITLED TO ENFORCE THE INSTRUMENT OR
AUTHORIZED TO OBTAIN PAYMENT ON BEHALF OF A PERSON ENTITLED TO
ENFORCE THE INSTRUMENT.

(2)     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 THE BREACH.

(E)     THE WARRANTIES STATED IN SUBSECTIONS (A) AND (D) 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) OR (D)
IS DISCHARGED TO THE EXTENT OF ANY LOSS CAUSED BY THE DELAY IN GIVING
NOTICE OF THE CLAIM.

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