This lesson covers warranties and conversion. Articles 3 and 4 provide a number of legal theories for liability. So far our focus has largely been on the liability of those who sign an instrument. We added wrongful dishonor to our repertoire last lesson. With warranties and conversion, we are getting an even more complete picture. They address situations where the losses at issue are rooted not so much in honor or dishonoring the instrument but in wrongdoing, such as theft and forgery. No doubt many of these situations also raise issues of criminal liability. Those questions are beyond the scope of this lesson.

Chapters
00:00 - Introduction
00:26 - (1) The Problem
08:42 - (2) The Solution: Warranties
09:01 - (A) Transfer warranty
09:17 - What is warranted?
11:26 - To whom does the warranty run?
12:34 - Warranty applies to status at the time of the transfer
14:30 - Behaviors that violate the transfer warranty
15:30 - Example one
23:20 - Example two
26:24 - (B) Presentment warranty
26:40 - What is warranted?
29:33 - Example
33:01 - (3) Article 3 Conversion
33:11 - Common law vs. Article 3 conversion
35:53 - Example introduced
38:55 - Continuing example: addressing concerns about windfalls
43:00 - Need for actual damages
43:34 - Limiting possible plaintiffs
46:16 - Safe harbor for intermediary banks
47:38 - Outro/Conclusion