Negligence Rule Law and Legal Definition

Negligence rule is a principle of commercial law 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. 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 are two examples of negligence.