47-3406. Negligence contributing to forged
signature or alteration of instrument
A. A person whose failure to exercise ordinary care substantially 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.
B. Under subsection A, if the person asserting the preclusion fails to exercise
ordinary care in paying or taking the instrument and that failure substantially
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.
C. Under subsection A, the burden of proving failure to exercise ordinary care is
on the person asserting the preclusion. Under subsection B, the burden of proving
failure to exercise ordinary care is on the person precluded.
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