KRS 355.3-406: Negligence contributing to forged signature or alteration of instrument.

(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.

(2) Under subsection (1) of this section, 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) of this section, the bu rden of proving failure to exercise

ordinary care is on the person asserting the preclusion. Under subsection (2) of this

section, the burden of proving failure to exercise ordinary care is on the person

precluded.