Sec. 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), if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure 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.
Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.
Structure Texas Statutes
Title 1 - Uniform Commercial Code
Chapter 3 - Negotiable Instruments
Subchapter D. Liability of Parties
Section 3.402. Signature by Representative
Section 3.403. Unauthorized Signature
Section 3.404. Impostors; Fictitious Payees
Section 3.405. Employer's Responsibility for Fraudulent Indorsement by Employee
Section 3.406. Negligence Contributing to Forged Signature or Alteration of Instrument
Section 3.408. Drawee Not Liable on Unaccepted Draft
Section 3.409. Acceptance of Draft; Certified Check
Section 3.410. Acceptance Varying Draft
Section 3.411. Refusal to Pay Cashier's Checks, Teller's Checks, and Certified Checks
Section 3.412. Obligation of Issuer of Note or Cashier's Check
Section 3.413. Obligation of Acceptor
Section 3.414. Obligation of Drawer
Section 3.415. Obligation of Indorser
Section 3.416. Transfer Warranties
Section 3.417. Presentment Warranties
Section 3.418. Payment or Acceptance by Mistake