Utah Code 70A-8-306. Effect of guaranteeing signature, indorsement, or instruction

(1)

A person who guarantees a signature of an indorser of a security certificate warrants that at the time of signing:

Terms Used In Utah Code 70A-8-306

Guarantor: A party who agrees to be responsible for the payment of another party's debts should that party default. ^{Source: OCC}
Indorsement: means a signature that alone or accompanied by other words is made on a security certificate in registered form or on a separate document for the purpose of assigning, transferring, or redeeming the security or granting a power to assign, transfer, or redeem it. See Utah Code 70A-8-101
Instruction: means a notification communicated to the issuer of an uncertificated security which directs that the transfer of the security be registered or that the security be redeemed. See Utah Code 70A-8-101
Person: means :Utah Code 68-3-12.5
Security: except as otherwise provided in Section 70A-8-102, means an obligation of an issuer or a share, participation, or other interest in an issuer or in property or an enterprise of an issuer that:

(i)	is represented by a security certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer;

(ii)	is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests, or obligations; and

(iii)

(A)	is, or is of a type, dealt in or traded on securities exchanges or securities markets; or

(B)

is a medium for investment and by its terms expressly provides that it is a security governed by this chapter. See Utah Code 70A-8-101

Security certificate: means a certificate representing a security. See Utah Code 70A-8-101

Signature: includes a name, mark, or sign written with the intent to authenticate an instrument or writing. See Utah Code 68-3-12.5

Uncertificated security: means a security that is not represented by a certificate. See Utah Code 70A-8-101

(a)

the signature was genuine;

(b)	the signer was an appropriate person to indorse, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person; and

(c)	the signer had legal capacity to sign.

(2)

A person who guarantees a signature of the originator of an instruction warrants that at the time of signing:

(a)	the signature was genuine;

(b)

the signer was an appropriate person to originate the instruction, or if the signature is by an agent, the agent had actual authority to act on behalf of the appropriate person, if the person specified in the instruction as the registered owner was, in fact, the registered owner, as to which fact the signature guarantor does not make a warranty; and

(c)	the signer had legal capacity to sign.

(3)

A person who specially guarantees the signature of an originator of an instruction makes the warranties of a signature guarantor under Subsection (2) and also warrants that at the time the instruction is presented to the issuer:

(a)	the person specified in the instruction as the registered owner of the uncertificated security will be the registered owner; and

(b)	the transfer of the uncertificated security requested in the instruction will be registered by the issuer free from all liens, security interests, restrictions, and claims other than those specified in the instruction.

(4)	A guarantor under Subsection (1) and (2) or a special guarantor under Subsection (3) does not otherwise warrant the rightfulness of the transfer.

(5)	A person who guarantees an indorsement of a security certificate makes the warranties of a signature guarantor under Subsection (1) and also warrants the rightfulness of the transfer in all respects.

(6)	A person who guarantees an instruction requesting the transfer of an uncertificated security makes the warranties of a special signature guarantor under Subsection (3) and also warrants the rightfulness of the transfer in all respects.

(7)	An issuer may not require a special guaranty of signature, a guaranty of indorsement, or a guaranty of instruction as a condition to registration of transfer.

(8)

The warranties under this section are made to a person taking or dealing with the security in reliance on the guaranty, and the guarantor is liable to the person for loss resulting from their breach. An indorser or originator of an instruction whose signature, indorsement, or instruction has been guaranteed is liable to a guarantor for any loss suffered by the guarantor as a result of breach of the warranties of the guarantor.

Repealed and Re-enacted by Chapter 204, 1996 General Session

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