(1)  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.

Terms Used In Utah Code 70A-3-406

  • Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
  • Person: means :Utah Code 68-3-12.5
  • Signature: includes a name, mark, or sign written with the intent to authenticate an instrument or writing. See Utah Code 68-3-12.5
(2)  Under Subsection (1), 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.

(3)  Under Subsection (1), the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under Subsection (2), the burden of proving failure to exercise ordinary care is on the person precluded.

Repealed and Re-enacted by Chapter 237, 1993 General Session