(Effective Until January 1, 1997) Effect of guaranteeing signature or indorsement.

(1) Any person guaranteeing a signature of an indorser of a security warrants that at the time of signing:

(a) The signature was genuine; and

(b) The signer was an appropriate person to indorse (Section 7-8-308); and

(c) The signer had legal capacity to sign.

But the guarantor does not otherwise warrant the rightfulness of the particular transfer.

(2) Any person may guarantee an indorsement of a security and by so doing warrants not only the signature (subsection (1)) but also the rightfulness of the particular transfer in all respects. But no issuer may require a guarantee of indorsement as a condition to registration of transfer.

(3) The foregoing warranties are made to any person taking or dealing with the security in reliance on the guarantee and the guarantor is liable to such person for any loss resulting from breach of the warranties.

(Acts 1965, No. 549, p. 811.)