New Jersey § 12a:4-207

§ 12a:4-207.

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 under subsection a.

of 12A:3-305 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 according to the terms of the item at the time it was transferred, or if the

transfer was of an incomplete item, according to its terms when completed as stated

in 12A:3-115 and 12A: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 cannot 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. 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 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.