Article 3 — Negotiable Instruments · Section 3-407
This section addresses the issue of signatures made by unauthorized persons and their effects in the context of negotiable instruments.
Source: U.C.C. § 3-407
A signature is ineffective unless the signer is an agent of the person whose name is signed or the signer is authorized.
UCC § 3-407 explains that if a person who signs a negotiable instrument is not authorized to do so, their signature is not legally valid. This means that the document cannot be enforced against the principal or entity they purported to represent.
A signature made by an individual without the authority of the person whose name appears on the instrument.
An individual authorized to act on behalf of another person, particularly in signing legal documents.
Example 1
A bank check signed by an employee without authorization from the account holder is invalid under UCC § 3-407.
Example 2
A promissory note signed by an executive who does not have the authority to bind the corporation would not be enforceable against the corporation.