                                 CODE OF VIRGINIA

PRESENTMENT WARRANTIES (§ 8.4-207.2)

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 that pays or accepts 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 purported drawer
   of the draft is unauthorized.

b. A drawee making payment may recover from a 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 a 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 (i) breach of
warranty is a defense to the obligation of the acceptor, and (ii) if the
acceptor makes payment with respect to the draft, the acceptor is entitled to
recover from a 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 item is presented for payment to a party obliged to
pay the item, and the item is paid, the person obtaining payment and a prior
transferor of the item warrant to the person making payment in good faith that
the warrantor is, or was, at the time the warrantor transferred the item, a
person entitled to enforce the item or authorized to obtain payment on behalf of
a person entitled to enforce the item. 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 warrantor 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: 1992, c. 693.