Also known as: forged signature · forgery of signature · forgery of signatures · forgery · signature forgery
Written by attorneys · grounded in primary & secondary sources — see below
A signature on a negotiable instrument made without actual, implied, or apparent authority of the person whose name appears. The signature renders the instrument irregular for purposes of determining holder-in-due-course status when the irregularity is apparent on its face. A person whose ordinary-care failure substantially contributes to the forgery is precluded from asserting it against a good-faith taker for value.
Felicity French receives a promissory note from Frontier Capital that bears what appears to be the maker's genuine signature and contains no visible alterations or irregularities. She pays value for the note without notice of any defect. Because the instrument shows no apparent evidence of forgery when negotiated to her, Felicity qualifies as a holder in due course entitled to enforce it free of personal defenses.
Flora Ford leaves signed blank checks in an unlocked desk drawer accessible to her office staff. An employee forges her signature on one check and negotiates it to Foster Forge, which takes the instrument in good faith and for value. Flora's failure to exercise ordinary care substantially contributed to the forgery, so she is precluded from asserting the forgery against Foster Forge.
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An instrument prevents HDC status when it bears apparent evidence of forgery or is otherwise so irregular as to call its authenticity into question at the time it is negotiated to the holder. The test focuses on visible irregularities rather than hidden defects.
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A person's failure to exercise ordinary care that substantially contributes to the making of a forged signature precludes that person from asserting the forgery against a good-faith taker for value or collection. The burden of proving the failure rests on the party asserting preclusion.
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An unauthorized signature is one made without actual, implied, or apparent authority and expressly includes a forgery. This definition governs both drawer signatures and indorsements on negotiable instruments.
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