Warranties and Conversion | Negotiable Instruments

This lesson covers warranties and conversion. Articles 3 and 4 provide a number of legal theories for liability. So far our focus has largely been on the liability of those who sign an instrument. We added wrongful dishonor to our repertoire last lesson. With warranties and conversion, we are getting an even more complete picture. They address situations where the losses at issue are rooted not so much in honor or dishonoring the instrument but in wrongdoing, such as theft and forgery. No doubt many of these situations also raise issues of criminal liability. Those questions are beyond the scope of this lesson. Chapters 00:00 - Introduction 00:26 - (1) The Problem 08:42 - (2) The Solution: Warranties 09:01 - (A) Transfer warranty 09:17 - What is warranted? 11:26 - To whom does the warranty run? 12:34 - Warranty applies to status at the time of the transfer 14:30 - Behaviors that violate the transfer warranty 15:30 - Example one 23:20 - Example two 26:24 - (B) Presentment warranty 26:40 - What is warranted? 29:33 - Example 33:01 - (3) Article 3 Conversion 33:11 - Common law vs. Article 3 conversion 35:53 - Example introduced 38:55 - Continuing example: addressing concerns about windfalls 43:00 - Need for actual damages 43:34 - Limiting possible plaintiffs 46:16 - Safe harbor for intermediary banks 47:38 - Outro/Conclusion