Legal Definitions - unauthorized indorsement

An unauthorized indorsement occurs when a signature is placed on a negotiable instrument, such as a check, by someone who does not have the legal authority or permission to do so. This signature is typically made on the back of the instrument, usually to transfer ownership or to enable it to be cashed or deposited. When such a signature is made without proper authorization, it is considered legally invalid and can have significant consequences for all parties involved.

Here are some examples to illustrate this concept:

• Stolen Check Forgery: Imagine a thief steals a paycheck made out to "Sarah Jenkins." The thief then signs "Sarah Jenkins" on the back of the check and attempts to cash it at a bank. The signature made by the thief is an unauthorized indorsement because the thief has no legal right or permission to sign Sarah Jenkins' name or to transfer ownership of the check.

• Employee Misappropriation: A bookkeeper for a small business, without the owner's knowledge or consent, writes a company check payable to a fictitious vendor. The bookkeeper then signs the owner's name on the back of the check and deposits it into their personal account. This signature by the bookkeeper is an unauthorized indorsement because they lacked the specific authority from the business owner to sign and transfer that particular check for personal gain.

• Family Member Without Authority: An adult child, without a valid power of attorney or explicit permission from their elderly parent, receives a refund check addressed to the parent. The child signs the parent's name on the back of the check and deposits it into an account solely controlled by the child. This signature constitutes an unauthorized indorsement because the child did not have the legal authority to sign on behalf of the parent for financial transactions, even if they believed it was for the parent's benefit.