State Codes and Statutes
Statutes > Utah > Title-70a > Chapter-08 > 70a-8-10770A-8-107. Warranties in direct holding.
(1) A person who transfers a certificated security to a purchaser for value warrants to thepurchaser, and an indorser, if the transfer is by indorsement, warrants to any subsequentpurchaser, that:
(a) the certificate is genuine and has not been materially altered;
(b) the transferor or indorser does not know of any fact that might impair the validity ofthe security;
(c) there is no adverse claim to the security;
(d) the transfer does not violate any restriction on transfer;
(e) if the transfer is by indorsement, the indorsement is made by an appropriate person, orif the indorsement is by an agent, the agent has actual authority to act on behalf of the appropriateperson; and
(f) the transfer is otherwise effective and rightful.
(2) A person who originates an instruction for registration of transfer of an uncertificatedsecurity to a purchaser for value warrants to the purchaser that:
(a) the instruction is made by an appropriate person, or if the instruction is by an agent,the agent has actual authority to act on behalf of the appropriate person;
(b) the security is valid;
(c) there is no adverse claim to the security; and
(d) at the time the instruction is presented to the issuer:
(i) the purchaser will be entitled to the registration of transfer;
(ii) the transfer will be registered by the issuer free from all liens, security interests,restrictions, and claims other than those specified in the instruction;
(iii) the transfer will not violate any restriction on transfer; and
(iv) the requested transfer will otherwise be effective and rightful.
(3) A person who transfers an uncertificated security to a purchaser for value and doesnot originate an instruction in connection with the transfer warrants that:
(a) the uncertificated security is valid;
(b) there is no adverse claim to the security;
(c) the transfer does not violate any restriction on transfer; and
(d) the transfer is otherwise effective and rightful.
(4) A person who indorses a security certificate warrants to the issuer that:
(a) there is no adverse claim to the security; and
(b) the indorsement is effective.
(5) A person who originates an instruction for registration of transfer of an uncertificatedsecurity warrants to the issuer that:
(a) the instruction is effective; and
(b) at the time the instruction is presented to the issuer the purchaser will be entitled to theregistration of transfer.
(6) A person who presents a certificated security for registration of transfer or forpayment or exchange warrants to the issuer that the person is entitled to the registration, payment,or exchange, but a purchaser for value and without notice of adverse claims to whom transfer isregistered warrants only that the person has no knowledge of any unauthorized signature in anecessary indorsement.
(7) If a person acts as agent of another in delivering a certificated security to a purchaser,
the identity of the principal was known to the person to whom the certificate was delivered, andthe certificate delivered by the agent was received by the agent from the principal or received bythe agent from another person at the direction of the principal, the person delivering the securitycertificate warrants only that the delivering person has authority to act for the principal and doesnot know of any adverse claim to the certificated security.
(8) A secured party who redelivers a security certificate received, or after payment andon order of the debtor delivers the security certificate to another person, makes only thewarranties of an agent under Subsection (7).
(9) Except as otherwise provided in Subsection (7), a broker acting for a customer makesto the issuer and a purchaser the warranties provided in Subsections (1) through (6). A brokerthat delivers a security certificate to its customer, or causes its customer to be registered as theowner of an uncertificated security, makes to the customer the warranties provided in Subsection(1) or (2), and has the rights and privileges of a purchaser under this section. The warranties ofand in favor of the broker acting as an agent are in addition to applicable warranties given by andin favor of the customer.
Repealed and Re-enacted by Chapter 204, 1996 General Session
