Tennessee Code Annotated

Tenn. Code Ann. § 47-4-208 (2026)

Presentment warranties

✓ current as of May 2026

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(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;
- (3) The warrantor has no knowledge that the signature of the purported drawer of the draft is unauthorized; and
- (4) If the instrument is a payee-initiated demand draft, the creation of the draft according to the terms on its face was authorized by the person on whose account the instrument is drawn.

(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 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 § 47-3-404 or § 47-3-405 or the drawer is precluded under § 47-3-406 or § 47-4-406 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 (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.

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

(g) A warrantor does not make the warranty under subdivision (a)(4) to a drawee who would not under then-applicable law make the same or substantially identical warranty to the warrantor with respect to a payee-initiated draft drawn on the warrantor and presented or transferred by the drawee.

Acts 1995, ch. 397, § 3; 2003, ch. 62, §§ 19 - 22.

Notes of Decisions

Cited in 9 cases, 1973–2004 · leading case: McConnico v. Third Nat'l Bank in Nashville, 499 S.W.2d 874 (Tenn. 1973).

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McConnico v. Third Nat'l Bank in Nashville, 499 S.W.2d 874 (Tenn. 1973). · cites it 6× “The security interests of collecting banks is set forth in T.C.A. § 47-4-208, 209. Had the claim of the trustee been asserted prior to final settlement of the instrument by the First American National Bank, the defendant bank would have had to establish value in accordance with…”

Lawyers Title Ins. v. United Am. Bank of Memphis, 21 F. Supp. 2d 785 (W.D. Tenn. 1998). · cites it 2× “Tenn.Code Ann. § 47-4-208. 12 . “An endorsement in blank specifies no particular endorsee and may consist of a mere signature.”

Mays v. Brighton Bank, 832 S.W.2d 347 (Tenn. Ct. App. 1992). “— (1) Subject to the provisions of § 47-4-208 on the security interest of a collecting bank, § 47-8-321 on security interests in securities and § 47-9-113 on a security interest arising under the chapter on sales, a security interest is not enforceable against the debtor or…”

Harber v. Leader Fed. Bank for Sav., 159 S.W.3d 545 (Tenn. Ct. App. 2004). “If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under § 47-4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.”

McLemore v. Third Nat'l Bank (In Re Montgomery), 123 B.R. 801 (Bankr. M.D. Tenn. 1991). “§ 47-4-208 (security interest of bank to extent it gives provisional credit to its customer).”

Brown v. Fed. Sav. Bank (In Re Brown), 209 B.R. 874 (Bankr. W.D. Tenn. 1997). “§ 47-4-208). 6 . There is no proof that these banks reversed any provisional credit.”

Fred's Fin. Co. v. Fred's of Dyersburg, Inc., 741 S.W.2d 903 (Tenn. Ct. App. 1987). “— (1) Subject to the provisions of § 47-4-208 on the security interest of a collecting bank and § 47-9-113 on a security interest arising under the chapter on sales, a security interest is not enforceable against the debtor or third parties unless: [[Image here]] *906 (b) the…”

Still v. City Bank & Trust Co. (In re Mayfield), 39 B.R. 900 (Bankr. E.D. Tenn. 1984). · cites it 2× “In the alternative, the court concludes that the bank has a perfected security in *902 terest in the note.”

Conister Trust v. Boating Corp. of Am. & Villas-Afloat (Tenn. Ct. App. 1999). “”19 (1) Subject to the provisions of § 47-4-208 on the security interest of a collecting bank, § 47-8-321 on security interests in securities and § 47-9-113 on a security interest arising under the chapter on sales, a security interest is not enforceable against the debtor or…”

— Tenn. Code Ann. § 47-4-208(1)(a) — 1 case

McConnico v. Third Nat'l Bank in Nashville, 499 S.W.2d 874 (Tenn. 1973). “The security interests of collecting banks is set forth in T.C.A. § 47-4-208, 209. Had the claim of the trustee been asserted prior to final settlement of the instrument by the First American National Bank, the defendant bank would have had to establish value in accordance with…”

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