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The Negligence Rule

Learn about the rules that apply if an affected person’s negligence contributes substantially to a forgery or alteration.


In another lesson, we discussed unauthorized signatures and alterations and learned that, generally, neither an unauthorized signature nor an alteration is effective. In this lesson, we’ll see how a party’s negligence might affect this allocation of loss.

I. The Negligence Rule

Under Article 3, if an instrument contains an unauthorized signature or alteration, and the affected party failed to exercise ordinary care, thereby substantially contributing to the forgery or alteration, then the...