New Jersey § 12a:3-416

§ 12a:3-416.

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. 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

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. of this section 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.