C.R.S. Section 4-4-207
Transfer warranties


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:


The warrantor is a person entitled to enforce the item;


All signatures on the item are authentic and authorized;


The item has not been altered;


The item is not subject to a defense or claim in recoupment (section 4-3-305 (a)) of any party that can be asserted against the warrantor;


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; and


If the item is a demand draft, creation of the item according to the terms on its face was authorized by the person identified as drawer. Nothing in this section shall be construed to impair the rights of the drawer against the drawee.


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 sections 4-3-115 and 4-3-407. 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 (b) by an indorsement stating that it is made “without recourse” or otherwise disclaiming liability.


A person to whom the warranties under subsection (a) of this section 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.


The warranties stated in subsection (a) of this section 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.


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


If the warranty in paragraph (6) of subsection (a) of this section is not given by a transferor or collecting bank under applicable conflict of law rules, then the warranty is not given to that transferor when that transferor is a transferee, nor to any prior collecting bank of that transferee.

Source: Section 4-4-207 — Transfer warranties, https://leg.­colorado.­gov/sites/default/files/images/olls/crs2023-title-04.­pdf (accessed Oct. 20, 2023).

Short title
Variation by agreement - measure of damages - action constituting ordinary care
Definitions and index of definitions
“Bank” - “depositary bank” - “intermediary bank” - “collecting bank” - “payor bank” - “presenting bank”
Payable through or payable at bank - collecting bank
Separate office of bank
Time of receipt of items
Electronic presentment
Statute of limitations
Status of collecting banks as agent and provisional status of credits - applicability of article - item indorsed “pay any bank”
Responsibility for collection or return - when action timely
Effect of instructions
Methods of sending and presenting - sending directly to payor bank
Depositary bank holder of unindorsed item
Transfer between banks
Transfer warranties
Presentment warranties
Encoding and retention warranties
Security interest of collecting bank in items, accompanying documents, and proceeds
When bank gives value for purposes of holder in due course
Presentment by notice of item not payable by, through, or at a bank - liability of drawer or indorser
Medium and time of settlement by bank
Right of charge-back or refund - liability of collecting bank - return of item
Final payment of item by payor bank - when provisional debits and credits become final - when certain credits become available for withdrawal
Insolvency and preference
Deferred posting - recovery of payment by return of items - time of dishonor - return of items by payor bank
Payor bank’s responsibility for late return of item
When items subject to notice, stop-payment order, legal process, or setoff - order in which items may be charged or certified
When bank may charge customer’s account
Bank’s liability to customer for wrongful dishonor - time of determining insufficiency of account
Customer’s right to stop payment - burden of proof of loss
Bank not obligated to pay check more than six months old
Death or incompetence of customer
Customer’s duty to discover and report unauthorized signature or alteration
Payor bank’s right to subrogation on improper payment
Handling of documentary drafts - duty to send for presentment and to notify customer of dishonor
Presentment of “on arrival” drafts
Responsibility of presenting bank for documents and goods - report of reason for dishonor - referee in case of need
Privilege of presenting bank to deal with goods - security interest for expenses
Green check means up to date. Up to date

Current through Fall 2024

§ 4-4-207’s source at colorado​.gov