§ 26-1-3.1-406 — Negligence contributing to forged signature or alteration of instrument

Indiana § 26-1-3.1-406

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 3.1: Negotiable Instruments

Text

(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.

Legislative History

As added by P.L.222-1993, SEC.5.