Kris is an administrative assistant with Little Financial Corporation, but has no authority to sign Little Financial checks. Kris orders merchandise from My-T-Fine Retail Company delivered to her home and pays with a Little Financial check, signing "Little Financial Corp. by Kris, admin. assist." My-T-Fine does not know that Kris has no authority to sign the check. Who is liable on the check, and why?
What will be an ideal response?
Kris is liable on the check, and Little Financial is not liable, although it is most likely that My-T-Fine will suffer the loss. As in cases involving forged drawers' signatures, in which the person whose name is forged is not liable, Little Financial can assert the defense of the unauthorized signature against any HDC. In this problem, My-T-Fine appears to qualify as an HDC because it did not know that Kris had no authority to sign the check. Kris is liable because she exceeded her authority in signing the check, purportedly on behalf of her employer. Assuming that Kris has either used the merchandise or resold it and absconded with the proceeds, however, My-T-Fine will thus most likely suffer the loss.
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