§ 41-03-43 — (3-406) Negligence contributing to forged signature or alteration of instrument

instrument.
1. 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 that, in good
faith, pays the instrument or takes it for value or for collection.
2. 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.
3. Under subsection 1, the burden of proving failure to exercise ordinary care is on the
person asserting the preclusion. Under subsection 2, the burden of proving failure to
exercise ordinary care is on the person precluded.

41-03-44. (3-407) Alteration.
1. "Alteration" means an unauthorized change in an instrument that purports to modify in
any respect the obligation of a party to the instrument or an unauthorized addition of
words or numbers or other change to an incomplete instrument relating to the
obligation of any party to the instrument.
2. Except as provided in subsection 3, an alteration fraudulently made discharges any
party whose obligation is affected by the alteration unless that party assents or is
precluded from asserting the alteration. No other alteration discharges any party, and
the instrument may be enforced according to its original terms.
3. A payor bank or drawee paying a fraudulently altered instrument or a person taking it
for value, in good faith and without notice of the alteration, may enforce rights with
respect to the instrument according to its original terms or in the case of an incomplete
instrument altered by unauthorized completion, according to its terms as completed.