(a) Content and provision of substitute-check warranties.
(1) A bank that transfers, presents, or
returns a substitute check (or a paper or electronic representation
of a substitute check) for which it receives consideration warrants
to the parties listed in paragraph (b) of this section that—
(i) The
substitute check meets the requirements for legal equivalence described
in section 229.51(a)(1) and (2); and
(ii) No depositary bank, drawee, drawer,
or indorser will receive presentment or return of, or otherwise be
charged for, the substitute check, the original check, or a paper
or electronic representation of the substitute check or original check
such that that person will be asked to make a payment based on a check
that it already has paid.
(2) A bank that rejects a check submitted
for deposit and returns to its customer a substitute check (or a paper
or electronic representation of a substitute check) makes the warranties
in paragraph (a)(1) of this section regardless of whether the bank
received consideration.
(b) Warranty recipients. A bank makes the warranties
described in paragraph (a) of this section to the person to which
the bank transfers, presents, or returns the substitute check or a
paper or electronic representation of such substitute check and to
any subsequent recipient, which could include a collecting or returning
bank, the depositary bank, the drawer, the drawee, the payee, the
depositor, and any indorser. These parties receive the warranties
regardless of whether they received the substitute check or a paper
or electronic representation of a substitute check.
