The character has had their arm severed somewhere between the wrist and the shoulder, and suffers the following penalties:
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Can no longer use two-handed weapons, shields (if the whole arm is missing), or one handed weapons in that arm.
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All tests that rely on the use of two hands are made with a -20 penalty.
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If both hands are lost, the character cannot wield weapons and automatically fails all tests that rely on the use of hands.