If a person has been so negligent in writing or signing a negotiable instrument that he in effect invites an alteration of an unauthorized signature on it, Article 3 of the Uniform Commercial Code (UCC) nevertheless allows her to use the alteration or lack of authorization as a reason for not paying a person who in good faith pays the instrument or takes it for value.

Question

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Under Article 3 of the Uniform Commercial Code (UCC), if a person has been negligent to the point of facilitating a forgery or alteration of a negotiable instrument, they may be precluded from asserting the alteration or lack of authorization as a defense against a holder in due course or a party who took the instrument in good faith and for value.

If a Person Has Been So Negligent in Writing or Signing