(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.
Structure Code of Alabama
Article 3 - Negotiable Instruments.
Part 4 - Liability of Parties.
Section 7-3-402 - Signature by Representative.
Section 7-3-403 - Unauthorized Signature.
Section 7-3-404 - Impostors; Fictitious Payees.
Section 7-3-405 - Employer's Responsibility for Fraudulent Indorsement by Employee.
Section 7-3-406 - Negligence Contributing to Forged Signature or Alteration of Instrument.
Section 7-3-408 - Drawee Not Liable on Unaccepted Draft.
Section 7-3-409 - Acceptance of Draft; Certified Check.
Section 7-3-410 - Acceptance Varying Draft.
Section 7-3-411 - Refusal to Pay Cashier's Checks, Teller's Checks, and Certified Checks.
Section 7-3-412 - Obligation of Issuer of Note or Cashier's Check.
Section 7-3-413 - Obligation of Acceptor.
Section 7-3-414 - Obligation of Drawer.
Section 7-3-415 - Obligation of Indorser.
Section 7-3-416 - Transfer Warranties.
Section 7-3-417 - Presentment Warranties.
Section 7-3-418 - Payment or Acceptance by Mistake.