Ch. 91                                      1996 LAWS OF MARYLAND

engagement to honor shall not exceed the consideration received by the customer or
collecting bank responsible plus finance charges and expenses related to the item, if any.

(4) Unless a claim for breach of warranty under this section is made within a
reasonable time after the person claiming learns of the breach, the person liable is
discharged to the extent of any loss caused by the delay in making claim.]

4-207.

(A)    A CUSTOMER OR COLLECTING BANK THAT TRANSFERS AN ITEM AND
RECEIVES A SETTLEMENT OR OTHER CONSIDERATION WARRANTS TO THE
TRANSFEREE AND TO ANY SUBSEQUENT COLLECTING BANK THAT:

(1)     THE WARRANTOR IS A PERSON ENTITLED TO ENFORCE THE ITEM;

(2)     ALL SIGNATURES ON THE ITEM ARE AUTHENTIC AND AUTHORIZED;

(3)     THE ITEM HAS NOT BEEN ALTERED;

(4)     THE ITEM IS NOT SUBJECT TO A DEFENSE OR CLAIM IN
RECOUPMENT (§ 3-305(A)) OF ANY PARTY THAT 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)     IF AN ITEM IS DISHONORED, A CUSTOMER OR COLLECTING BANK
TRANSFERRING THE ITEM AND RECEIVING SETTLEMENT OR OTHER
CONSIDERATION IS OBLIGED TO PAY THE AMOUNT DUE ON THE ITEM (I)
ACCORDING TO THE TERMS OF THE ITEM AT THE TIME IT WAS TRANSFERRED, OR
(II) IF THE TRANSFER WAS OF AN INCOMPLETE ITEM ACCORDING TO ITS TERMS
WHEN COMPLETED AS STATED IN §§ 3-115 AND 3-407. THE OBLIGATION OF A
TRANSFEROR IS OWED TO THE TRANSFEREE AND TO ANY SUBSEQUENT
COLLECTING BANK THAT TAKES THE ITEM IN GOOD FAITH. A TRANSFEROR CANNOT
DISCLAIM ITS OBLIGATION UNDER THIS SUBSECTION BY AN INDORSEMENT STATING
THAT IT IS MADE "WITHOUT RECOURSE" OR OTHERWISE DISCLAIMING LIABILITY.

(C) A PERSON TO WHOM THE WARRANTIES UNDER SUBSECTION (A) ARE
MADE AND WHO TOOK THE ITEM 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 ITEM PLUS EXPENSES AND LOSS OF INTEREST INCURRED AS A
RESULT OF THE BREACH.

(D) 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 WARRANTOR IS DISCHARGED TO THE EXTENT OF ANY LOSS CAUSED BY THE
DELAY IN GIVING NOTICE OF THE CLAIM.

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