Negligence contributing to forged signature or alteration of instrument.

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(a) A person whose failure to exercise ordinary care contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.

  1. Under subsection (a) of this section, if the person asserting the preclusion fails toexercise ordinary care in paying or taking the instrument and that failure contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

  2. Under subsection (a) of this section, the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under subsection (b) of this section, the burden of proving failure to exercise ordinary care is on the person precluded.

Source: L. 94: Entire article R&RE, p. 865, § 1, effective January 1, 1995.

Editor's note: This section is similar to former § 4-3-406 as it existed prior to 1994.


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