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Texas Business & Commerce Code

§ 3.406 — NEGLIGENCE CONTRIBUTING TO FORGED SIGNATURE OR ALTERATION OF INSTRUMENT

BC § 3.406Title 1. UNIFORM COMMERCIAL CODE · Ch. 3. NEGOTIABLE INSTRUMENTS · Art. D. LIABILITY OF PARTIES

Statute text

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(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.

Legislative history

Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.

Source: Texas Business & Commerce Code § 3.406 from the Texas Constitution and Statutes (Texas Legislature) (public record). DecisionDepot is for informational use only and is not legal advice — verify against the official source before relying on this text.