Ian transfers a note, for consideration, to Jock by blank indorsement and delivery. Jock transfers the note to Kelly, who takes it in good faith. What does Ian warrant to Kelly?
What will be an ideal response?
Any person who transfers an instrument for consideration makes certain warranties to the transferee and, if the transfer is by indorsement, to all later transferees and holders who take the instrument in good faith. These are referred to as transfer warranties. In this problem, Ian warrants to Kelly that he is entitled to enforce the note, all signatures are authentic and authorized, the note has not been altered, the note is not subject to a defense or claim that can be asserted against him, and he has no knowledge of any insolvency proceedings against the maker.
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