Tex. Bus. & Com. Code Section 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.

Source: Section 3.406 — Negligence Contributing to Forged Signature or Alteration of Instrument, https://statutes.­capitol.­texas.­gov/Docs/BC/htm/BC.­3.­htm#3.­406 (accessed Jun. 5, 2024).

3.101
Short Title 3.102
Subject Matter 3.103
Definitions 3.104
Negotiable Instrument 3.105
Issue of Instrument 3.106
Unconditional Promise or Order 3.107
Instrument Payable in Foreign Money 3.108
Payable on Demand or at Definite Time 3.109
Payable to Bearer or to Order 3.110
Identification of Person to Whom Instrument Is Payable 3.111
Place of Payment 3.112
Interest 3.113
Date of Instrument 3.114
Contradictory Terms of Instrument 3.115
Incomplete Instrument 3.116
Joint and Several Liability 3.117
Other Agreements Affecting Instrument 3.118
Statute of Limitations 3.119
Notice of Right to Defend Action 3.201
Negotiation 3.202
Negotiation Subject to Rescission 3.203
Transfer of Instrument 3.204
Indorsement 3.205
Special Indorsement 3.206
Restrictive Indorsement 3.207
Reacquisition 3.301
Person Entitled to Enforce Instrument 3.302
Holder in Due Course 3.303
Value and Consideration 3.304
Overdue Instrument 3.305
Defenses and Claims in Recoupment 3.306
Claims to an Instrument 3.307
Notice of Breach of Fiduciary Duty 3.308
Proof of Signatures and Status as Holder in Due Course 3.309
Enforcement of Lost, Destroyed, or Stolen Instrument 3.310
Effect of Instrument on Obligation for Which Taken 3.311
Accord and Satisfaction by Use of Instrument 3.312
Lost, Destroyed, or Stolen Cashier’s Check, Teller’s Check, or Certified Check 3.401
Signature 3.402
Signature by Representative 3.403
Unauthorized Signature 3.404
Impostors 3.405
Employer’s Responsibility for Fraudulent Indorsement by Employee 3.406
Negligence Contributing to Forged Signature or Alteration of Instrument 3.407
Alteration 3.408
Drawee Not Liable on Unaccepted Draft 3.409
Acceptance of Draft 3.410
Acceptance Varying Draft 3.411
Refusal to Pay Cashier’s Checks, Teller’s Checks, and Certified Checks 3.412
Obligation of Issuer of Note or Cashier’s Check 3.413
Obligation of Acceptor 3.414
Obligation of Drawer 3.415
Obligation of Indorser 3.416
Transfer Warranties 3.417
Presentment Warranties 3.418
Payment or Acceptance by Mistake 3.419
Instruments Signed for Accommodation 3.420
Conversion of Instrument 3.501
Presentment 3.502
Dishonor 3.503
Notice of Dishonor 3.504
Excused Presentment and Notice of Dishonor 3.505
Evidence of Dishonor 3.506
Processing Fee by Holder of Payment Device 3.507
Delivery Notification Fee by Holder of Check or Similar Sight Order 3.601
Discharge and Effect of Discharge 3.602
Payment 3.603
Tender of Payment 3.604
Discharge by Cancellation or Renunciation 3.605
Discharge of Secondary Obligors
Green check means up to date. Up to date

Accessed:
Jun. 5, 2024

§ 3.406’s source at texas​.gov