ILCS » Chapter 810 · Act 5

810 ILCS 5/3-416

Transfer warranties

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(810 ILCS 5/3-416) (from Ch. 26, par. 3-416)
    Sec. 3-416. Transfer warranties.
    (a) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by indorsement, to any subsequent transferee that:
        (1) the warrantor is a person entitled to enforce the
    
instrument,
        (2) all signatures on the instrument are authentic
    
and authorized,
        (3) the instrument has not been altered,
        (4) the instrument is not subject to a defense or
    
claim in recoupment of any party which can be asserted against the warrantor, and
        (5) 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.
    (b) A person to whom the warranties under subsection (a) are made and who took the instrument 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 instrument plus expenses and loss of interest incurred as a result of the breach.
    (c) The warranties stated in subsection (a) cannot be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 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) is discharged to the extent of any loss caused by the delay in giving notice of the claim.
    (d) A cause of action for breach of warranty under this Section accrues when the claimant has reason to know of the breach.
(Source: P.A. 87-582; 87-1135.)

    
Notes of Decisions
Cited in 3 cases (3 in the last 5 years), 2023–2026 · leading case: Western & Lake Check Cashers, LLC v. Propane Pete, LLC
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Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct · cites it 4× “810 ILCS 5/3-416(a) (West 2020). To conclude that defendant was the warrantor is absurd and flatly contrary to the text.”
West State Street Check Cashing v. United Equitable Group, Ltd. (2026) illappct · cites it 2× “” 810 ILCS 5/3-416 (West 2024). ¶ 31 As discussed above, Oliver was the transferor of the draft.”
Byline Bank v. Bank of America (2025) illappct “Second, it warranted that, pursuant to sections 5/3-416 and 5/4-207 (810 ILCS 5/3-416), (810 ILCS 5/4-207) (West 2020)), it was entitled to enforce the checks, and that all signatures were authentic and had been verified.”
— 810 ILCS 5/3-416(a) — 2 cases
Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct “810 ILCS 5/3-416(a) (West 2020). To conclude that defendant was the warrantor is absurd and flatly contrary to the text.”
West State Street Check Cashing v. United Equitable Group, Ltd. (2026) illappct “” 810 ILCS 5/3-416 (West 2024). ¶ 31 As discussed above, Oliver was the transferor of the draft.”
— 810 ILCS 5/3-416(a)(5) — 1 case
Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct “810 ILCS 5/3-416(a) (West 2020). To conclude that defendant was the warrantor is absurd and flatly contrary to the text.”
— 810 ILCS 5/3-416(b) — 1 case
Western & Lake Check Cashers, LLC v. Propane Pete, LLC (2023) illappct “810 ILCS 5/3-416(a) (West 2020). To conclude that defendant was the warrantor is absurd and flatly contrary to the text.”
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