PARRIS N. GLENDENING, Governor

Ch. 91

(1)     "EMPLOYEE" INCLUDES AN INDEPENDENT CONTRACTOR AND
EMPLOYEE OF AN INDEPENDENT CONTRACTOR RETAINED BY THE EMPLOYER.

(2)     "FRAUDULENT INDORSEMENT' MEANS (I) IN THE CASE OF AN
INSTRUMENT PAYABLE TO THE EMPLOYER, A FORGED INDORSEMENT PURPORTING
TO BE THAT OF THE EMPLOYER, OR (II) IN THE CASE OF AN INSTRUMENT WITH
RESPECT TO WHICH THE EMPLOYER IS THE ISSUER, A FORGED INDORSEMENT
PURPORTING TO BE THAT OF THE PERSON IDENTIFIED AS PAYEE

(3)     "RESPONSIBILITY" WITH RESPECT TO INSTRUMENTS MEANS
AUTHORITY (I) TO SIGN OR INDORSE INSTRUMENTS ON BEHALF OF THE EMPLOYER,
(II) TO PROCESS INSTRUMENTS RECEIVED BY THE EMPLOYER FOR BOOKKEEPING
PURPOSES, FOR DEPOSIT TO AN ACCOUNT, OR FOR OTHER DISPOSITION, (III) TO
PREPARE OR PROCESS INSTRUMENTS FOR ISSUE IN THE NAME OF THE EMPLOYER,
(IV) TO SUPPLY INFORMATION DETERMINING THE NAMES OR ADDRESSES OF
PAYEES OF INSTRUMENTS TO BE ISSUED IN THE NAME OF THE EMPLOYER, (V) TO
CONTROL THE DISPOSITION OF INSTRUMENTS TO BE ISSUED IN THE NAME OF THE
EMPLOYER, OR (VI) TO ACT OTHERWISE WITH RESPECT TO INSTRUMENTS IN A
RESPONSIBLE CAPACITY. "RESPONSIBILITY" DOES NOT INCLUDE AUTHORITY THAT
MERELY ALLOWS AN EMPLOYEE TO HAVE ACCESS TO INSTRUMENTS OR BLANK OR
INCOMPLETE INSTRUMENT FORMS THAT ARE BEING STORED OR TRANSPORTED OR
ARE PART OF INCOMING OR OUTGOING MAIL, OR SIMILAR ACCESS.

(B)     FOR THE PURPOSE OF DETERMINING THE RIGHTS AND LIABILITIES OF A
PERSON WHO, IN GOOD FAITH, PAYS AN INSTRUMENT OR TAKES IT FOR VALUE OR
FOR COLLECTION, IF AN EMPLOYER ENTRUSTED AN EMPLOYEE WITH
RESPONSIBILITY WITH RESPECT TO THE INSTRUMENT AND THE EMPLOYEE OR A
PERSON ACTING IN CONCERT WITH THE EMPLOYEE MAKES A FRAUDULENT
INDORSEMENT OF THE INSTRUMENT, THE INDORSEMENT IS EFFECTIVE AS THE
INDORSEMENT OF THE PERSON TO WHOM THE INSTRUMENT IS PAYABLE IF IT IS
MADE IN THE NAME OF THAT PERSON. IF THE PERSON PAYING THE INSTRUMENT OR
TAKING IT FOR VALUE OR FOR COLLECTION FAILS TO EXERCISE ORDINARY CARE
IN PAYING OR TAKING THE INSTRUMENT AND THAT FAILURE SUBSTANTIALLY
CONTRIBUTES TO LOSS RESULTING FROM THE FRAUD, THE PERSON BEARING THE
LOSS MAY RECOVER FROM THE PERSON FAILING TO EXERCISE ORDINARY CARE TO
THE EXTENT THE FAILURE TO EXERCISE ORDINARY CARE CONTRIBUTED TO THE
LOSS.

(C)     UNDER SUBSECTION (B), AN INDORSEMENT IS MADE IN THE NAME OF
THE PERSON TO WHOM AN INSTRUMENT IS PAYABLE IF (I) IT IS MADE IN A NAME
SUBSTANTIALLY SIMILAR TO THE NAME OF THAT PERSON OR (II) THE INSTRUMENT,
WHETHER OR NOT INDORSED, IS DEPOSITED IN A DEPOSITARY BANK TO AN
ACCOUNT IN A NAME SUBSTANTIALLY SIMILAR TO THE NAME OF THAT PERSON.

3-406.

(A) 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

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