                                 CODE OF VIRGINIA

PRESENTMENT WARRANTIES (§ 8.3A-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 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 endorsement of the draft or an alteration of the draft, the
warrantor may defend by proving that the endorsement is effective under &#xA7;
8.3A-404 or &#xA7; 8.3A-405 or the drawer is precluded under &#xA7; 8.3A-406 or
&#xA7; 8.4-406 from asserting against the drawee the unauthorized endorsement or
alteration.

d. If (i) a dishonored draft is presented for payment to the drawer or an
endorser 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 thirty 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.

f. A cause of action for breach of warranty under this section accrues when the
claimant has reason to know of the breach.

HISTORY: Code 1950, §§ 6-417, 6-421; 1964, c. 219, § 8.3-417; 1992, c. 693.