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§3-406. Negligence contributing to forged signature or alteration of instrument


Published: 2015

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The Vermont Statutes Online



Title

09A

:
Uniform Commercial Code






Chapter

003

:
Commercial Paper











 

§

3-406. 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) of this section, 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) 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. (Added 1993, No. 158 (Adj. Sess.), § 12, eff. Jan. 1,

1995.)