NEGLIGENCE RULE

NEGLIGENCE RULE

negligence rule. Commercial law. The principle that if a party’s negligence contributes to an unauthorized signing or a material alteration in a negotiable instrument, that party is estopped from raising this issue against later parties who transfer or pay the instrument in good faith. ? Examples of negligence include leaving blanks or spaces on the amount line of the instrument, erroneously mailing the instrument to a person with the same name as the payee, and failing to follow internal procedures designed to prevent forgeries. [Cases: Banks and Banking 148(3); Bills and Notes 279, 365(2). C.J.S. Banks and Banking ¡ì¡ì 434¨C435; Bills and Notes; Letters of Credit ¡ì¡ì 29¨C30, 33, 150¨C151.]
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Carl, Chinese legal translator, specializes in translating legal documents pertaining to complex business disputes.