Sec. 407. (a) “Alteration” means:

(1) an unauthorized change in an instrument that purports to modify in any respect the obligation of a party; or

Terms Used In Indiana Code 26-1-3.1-407

  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
(2) an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

     (b) Except as provided in subsection (c), an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. No other alteration discharges a party, and the instrument may be enforced according to its original terms.

     (c) A payor bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument:

(1) according to its original terms; or

(2) in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed.

As added by P.L.222-1993, SEC.5.

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