Illinois Compiled Statutes
810 ILCS 5/4-207 (2026)
Transfer warranties
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(810 ILCS 5/4-207)
(from Ch. 26, par. 4-207)
Sec. 4-207.
Transfer warranties.
(a) 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:
(1) the warrantor is a person entitled to enforce the | item; |
(2) all signatures on the item are authentic and | authorized; |
(3) the item has not been altered;
(4) the item is not subject to a defense or claim in | recoupment (Section 3-305(a)) of any party that 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) 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 3-115 and
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
may not disclaim its obligation under this subsection by an indorsement
stating that it is made "without recourse" or otherwise disclaiming liability.
(c) A person to whom the warranties under subsection (a) 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.
(d) 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 warrantor is
discharged to the extent of any loss caused by the delay in giving notice
of the claim.
(e) 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.)
Notes of Decisions
Cited in 7
cases (1 in the last 5 years), 1993–2025 · leading case: Newell v. Newell, 942 N.E.2d 776 (Ill. App. Ct. 2011).
Newell v. Newell, 942 N.E.2d 776 (Ill. App. Ct. 2011). “" 810 ILCS 5/4-207(e) (West 2006). Likewise, a cause of action for breach of a presentment warranty "accrues when the claimant has reason to know the breach.”
Great Lakes Higher Educ. Corp. v. Austin Bank of Chicago, 837 F. Supp. 892 (N.D. Ill. 1993). “ffs Great Lakes Higher Education Corporation (“Great Lakes”) and First Wisconsin National Bank of Milwaukee (“First Wisconsin”) filed a five count complaint against Defendant Austin Bank of Chicago (“Austin”) alleging breach of warranty (810 *894 ILCS 5/4-207), negligence in the…”
Cnty. of Pierce v. Suburban Bank of Elmhurst, 815 F. Supp. 1124 (N.D. Ill. 1993). “810 ILCS 5/4-207 (1992). Under § 4-207, a collecting bank warrants to a drawee bank that all endorsements on a check are valid.”
Henry v. Waller, 2012 IL App (1st) 102068 (Ill. App. Ct. 2012). “See 810 ILCS 5/4-207(a), 3-416(a) (West 2006).”
Byline Bank v. Bank of Am., 2025 IL App (1st) 230927-U (Ill. App. Ct. 2025). “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.”
Newell v. Newell (Ill. App. Ct. 2011). “" 810 ILCS 5/4-207(e) (West 2006). Likewise, a cause of action for breach of a presentment warranty "accrues when the claimant has reason to know the breach.”
Advocate Health & Hospitals Corp. v. Bank One, N.A. (Ill. App. Ct. 2004). “Aside from the imposter defense, due to the client's forged signature on the check, the bank that accepted it, American National, would be liable for warranting to the subsequent bank, First National, that "all signatures on the item are authentic and authorized.”
— 810 ILCS 5/4-207(a) — 1 case
Henry v. Waller, 2012 IL App (1st) 102068 (Ill. App. Ct. 2012). “See 810 ILCS 5/4-207(a), 3-416(a) (West 2006).”
— 810 ILCS 5/4-207(a)(2) — 1 case
Advocate Health & Hospitals Corp. v. Bank One, N.A. (Ill. App. Ct. 2004). “Aside from the imposter defense, due to the client's forged signature on the check, the bank that accepted it, American National, would be liable for warranting to the subsequent bank, First National, that "all signatures on the item are authentic and authorized.”
— 810 ILCS 5/4-207(c) — 1 case
Cnty. of Pierce v. Suburban Bank of Elmhurst, 815 F. Supp. 1124 (N.D. Ill. 1993). “810 ILCS 5/4-207 (1992). Under § 4-207, a collecting bank warrants to a drawee bank that all endorsements on a check are valid.”
— 810 ILCS 5/4-207(d) — 1 case
Cnty. of Pierce v. Suburban Bank of Elmhurst, 815 F. Supp. 1124 (N.D. Ill. 1993). “810 ILCS 5/4-207 (1992). Under § 4-207, a collecting bank warrants to a drawee bank that all endorsements on a check are valid.”
— 810 ILCS 5/4-207(e) — 2 cases
Newell v. Newell, 942 N.E.2d 776 (Ill. App. Ct. 2011). “" 810 ILCS 5/4-207(e) (West 2006). Likewise, a cause of action for breach of a presentment warranty "accrues when the claimant has reason to know the breach.”
Newell v. Newell (Ill. App. Ct. 2011). “" 810 ILCS 5/4-207(e) (West 2006). Likewise, a cause of action for breach of a presentment warranty "accrues when the claimant has reason to know the breach.”
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