If a person paying an instrument subject to the impostor rule fails to exercise ordinary care, the issuer may recover from the payor to the extent the payor's negligence contributed to the loss.

Question

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Under the impostor rule, if a person (the payor) fails to exercise ordinary care in paying an instrument and that failure substantially contributes to a loss, the issuer can recover from the payor to the extent the payor's negligence contributed to the loss. This principle is designed to allocate the loss between the negligent parties based on their respective contributions to the loss.

If a Person Paying an Instrument Subject to the Impostor