diff --git a/app/components/Navbar.tsx b/app/components/Navbar.tsx
index efa1b60..86e431d 100644
--- a/app/components/Navbar.tsx
+++ b/app/components/Navbar.tsx
@@ -3,6 +3,7 @@ import { useWallet } from "@/app/context/WalletContext";
 import { useIsAdmin } from "@/app/hooks/useIsAdmin";
 import { SUPPORTED_WALLETS } from "@/app/context/WalletContext";
 import Link from "next/link";
+import WalletBadge from "./WalletBadge";
 
 export default function Navbar() {
   const {
@@ -16,8 +17,6 @@ export default function Navbar() {
   } = useWallet();
   const { isAdminUser } = useIsAdmin(address);
 
-  const short = (addr: string) => `${addr.slice(0, 4)}...${addr.slice(-4)}`;
-
   const focusRing =
     "focus-visible:outline-none focus-visible:ring-2 focus-visible:ring-indigo-400 focus-visible:ring-offset-2 focus-visible:ring-offset-gray-950 rounded";
 
@@ -31,18 +30,30 @@ export default function Navbar() {
           ⚠️ {networkMismatchMessage}
         </div>
       )}
+      {/*
+       * `relative z-10` establishes a stacking context so the nav sits above
+       * non-overlay page content on mobile. Full-screen overlays (LedgerLoaderOverlay,
+       * WalletLoaderOverlay) intentionally use z-50 and will still cover the nav
+       * correctly during wallet operations.
+       */}
       <nav
         aria-label="Primary"
-        className="border-b border-gray-800 bg-gray-950 px-6 py-4 flex items-center justify-between"
+        className="relative z-10 border-b border-gray-800 bg-gray-950 px-4 sm:px-6 py-3 sm:py-4 flex items-center justify-between gap-2 flex-wrap"
       >
         <Link
           href="/"
           aria-label="Escrow home"
-          className={`text-xl font-bold text-white tracking-tight ${focusRing}`}
+          className={`text-xl font-bold text-white tracking-tight shrink-0 ${focusRing}`}
         >
           <span aria-hidden="true">🔐</span> Escrow
         </Link>
-        <div className="flex items-center gap-4">
+        {/*
+         * `flex-wrap` allows nav items to wrap to a second line on narrow
+         * viewports (e.g. iPhone SE 375px wide) instead of overflowing
+         * horizontally and pushing the wallet badge out of the clickable area.
+         * `min-w-0` prevents flex children from refusing to shrink.
+         */}
+        <div className="flex items-center gap-2 sm:gap-4 flex-wrap min-w-0">
           {address ? (
             <>
               <Link
@@ -65,19 +76,12 @@ export default function Navbar() {
                   Admin
                 </Link>
               )}
-              <span
-                role="status"
-                className="text-xs sm:text-sm text-gray-300 font-mono bg-gray-800 px-2 py-0.5 sm:px-3 sm:py-1 rounded-full transition-colors duration-200"
-                aria-label={`Connected wallet ${address}`}
-              >
-                {short(address)}
-              </span>
-              <button
-                onClick={disconnect}
-                className={`bg-gray-700 hover:bg-gray-600 text-white text-sm font-medium px-4 py-2 rounded-lg transition ${focusRing}`}
-              >
-                Disconnect
-              </button>
+              <WalletBadge
+                address={address}
+                status="connected"
+                onDisconnect={disconnect}
+                className="shrink-0"
+              />
             </>
           ) : (
             <>
diff --git a/app/components/__tests__/WalletBadge.test.tsx b/app/components/__tests__/WalletBadge.test.tsx
new file mode 100644
index 0000000..bc337f9
--- /dev/null
+++ b/app/components/__tests__/WalletBadge.test.tsx
@@ -0,0 +1,209 @@
+/**
+ * WalletBadge – mobile viewport overlay / clickability tests
+ *
+ * Issue #259: wallet_badge interactive elements must remain clickable at
+ * mobile viewport heights and must not be obscured by stacking-context issues.
+ *
+ * jsdom does not do real CSS layout or z-index painting, so we verify:
+ *  - the interactive element is rendered and present in the DOM at any viewport
+ *  - pointer-events are not explicitly disabled on the element (style check)
+ *  - click handlers fire correctly at a simulated mobile viewport size
+ *  - desktop viewport rendering is unchanged (regression)
+ *
+ * The viewport height is simulated by resizing window.innerHeight before
+ * rendering, matching common culprit heights for mobile "short viewport" bugs
+ * (iPhone SE: 568px, iPhone 8: 667px).
+ */
+
+import { describe, it, expect, vi, beforeEach, afterEach } from "vitest";
+import { render, screen, fireEvent } from "@testing-library/react";
+import WalletBadge from "../WalletBadge";
+
+// ---------------------------------------------------------------------------
+// Helpers
+// ---------------------------------------------------------------------------
+
+function setViewport(width: number, height: number) {
+  Object.defineProperty(window, "innerWidth", {
+    writable: true,
+    configurable: true,
+    value: width,
+  });
+  Object.defineProperty(window, "innerHeight", {
+    writable: true,
+    configurable: true,
+    value: height,
+  });
+}
+
+const MOBILE_VIEWPORTS = [
+  { label: "iPhone SE (375×568)", width: 375, height: 568 },
+  { label: "iPhone 8 (375×667)", width: 375, height: 667 },
+  { label: "iPhone 8 Plus (414×736)", width: 414, height: 736 },
+] as const;
+
+const TEST_ADDRESS = "GBHK5YMW4RJL5Q3Z6GXPRQ7GQSFN7W5Y3Y3K7H5T6L7M8N9P0Q1R2S3";
+
+// ---------------------------------------------------------------------------
+// Suite
+// ---------------------------------------------------------------------------
+
+describe("WalletBadge – mobile viewport overlay/clickability (Issue #259)", () => {
+  let originalInnerWidth: number;
+  let originalInnerHeight: number;
+
+  beforeEach(() => {
+    originalInnerWidth = window.innerWidth;
+    originalInnerHeight = window.innerHeight;
+  });
+
+  afterEach(() => {
+    setViewport(originalInnerWidth, originalInnerHeight);
+  });
+
+  // ── 1. Interactive element present + pointer-events not disabled ──────────
+
+  describe("interactive element presence at mobile viewport heights", () => {
+    MOBILE_VIEWPORTS.forEach(({ label, width, height }) => {
+      it(`disconnect button is in the DOM at ${label}`, () => {
+        setViewport(width, height);
+        const onDisconnect = vi.fn();
+        render(
+          <WalletBadge
+            address={TEST_ADDRESS}
+            status="connected"
+            onDisconnect={onDisconnect}
+          />
+        );
+        const btn = screen.getByRole("button", { name: /disconnect wallet/i });
+        expect(btn).toBeInTheDocument();
+      });
+
+      it(`disconnect button does not have pointer-events: none at ${label}`, () => {
+        setViewport(width, height);
+        const onDisconnect = vi.fn();
+        render(
+          <WalletBadge
+            address={TEST_ADDRESS}
+            status="connected"
+            onDisconnect={onDisconnect}
+          />
+        );
+        const btn = screen.getByRole("button", { name: /disconnect wallet/i });
+        // jsdom computes inline styles; Tailwind class-based styles are not
+        // applied by jsdom, but we can assert no inline override exists.
+        expect(btn).not.toHaveStyle({ pointerEvents: "none" });
+      });
+    });
+  });
+
+  // ── 2. Click handler fires at mobile viewport heights ────────────────────
+
+  describe("click handler fires at mobile viewport heights", () => {
+    MOBILE_VIEWPORTS.forEach(({ label, width, height }) => {
+      it(`onDisconnect fires when disconnect button is clicked at ${label}`, () => {
+        setViewport(width, height);
+        const onDisconnect = vi.fn();
+        render(
+          <WalletBadge
+            address={TEST_ADDRESS}
+            status="connected"
+            onDisconnect={onDisconnect}
+          />
+        );
+        const btn = screen.getByRole("button", { name: /disconnect wallet/i });
+        fireEvent.click(btn);
+        expect(onDisconnect).toHaveBeenCalledTimes(1);
+      });
+    });
+  });
+
+  // ── 3. Desktop regression – existing behavior unchanged ──────────────────
+
+  describe("desktop viewport rendering (regression)", () => {
+    beforeEach(() => {
+      // Standard desktop: 1280×800
+      setViewport(1280, 800);
+    });
+
+    it("renders the wallet-badge element", () => {
+      render(
+        <WalletBadge address={TEST_ADDRESS} status="connected" />
+      );
+      expect(screen.getByTestId("wallet-badge")).toBeInTheDocument();
+    });
+
+    it("shows truncated address", () => {
+      render(
+        <WalletBadge address={TEST_ADDRESS} status="connected" />
+      );
+      expect(screen.getByTestId("wallet-badge")).toHaveTextContent("GBHK...R2S3");
+    });
+
+    it("renders disconnect button when onDisconnect is provided", () => {
+      const onDisconnect = vi.fn();
+      render(
+        <WalletBadge
+          address={TEST_ADDRESS}
+          status="connected"
+          onDisconnect={onDisconnect}
+        />
+      );
+      expect(
+        screen.getByRole("button", { name: /disconnect wallet/i })
+      ).toBeInTheDocument();
+    });
+
+    it("does not render disconnect button when onDisconnect is omitted", () => {
+      render(
+        <WalletBadge address={TEST_ADDRESS} status="connected" />
+      );
+      expect(
+        screen.queryByRole("button", { name: /disconnect wallet/i })
+      ).not.toBeInTheDocument();
+    });
+
+    it("onDisconnect fires on click at desktop size", () => {
+      const onDisconnect = vi.fn();
+      render(
+        <WalletBadge
+          address={TEST_ADDRESS}
+          status="connected"
+          onDisconnect={onDisconnect}
+        />
+      );
+      fireEvent.click(screen.getByRole("button", { name: /disconnect wallet/i }));
+      expect(onDisconnect).toHaveBeenCalledTimes(1);
+    });
+
+    it("renders loading state", () => {
+      render(<WalletBadge status="loading" />);
+      const badge = screen.getByTestId("wallet-badge");
+      expect(badge).toHaveAttribute("data-status", "loading");
+      expect(badge).toHaveTextContent(/connecting/i);
+    });
+
+    it("renders error state with message", () => {
+      render(
+        <WalletBadge status="error" errorMessage="Failed to connect" />
+      );
+      const badge = screen.getByTestId("wallet-badge");
+      expect(badge).toHaveAttribute("data-status", "error");
+      expect(badge).toHaveTextContent("Failed to connect");
+    });
+
+    it("renders error state with fallback text when no errorMessage", () => {
+      render(<WalletBadge status="error" />);
+      expect(screen.getByTestId("wallet-badge")).toHaveTextContent(
+        /wallet error/i
+      );
+    });
+
+    it("renders disconnected state", () => {
+      render(<WalletBadge status="disconnected" />);
+      const badge = screen.getByTestId("wallet-badge");
+      expect(badge).toHaveAttribute("data-status", "disconnected");
+      expect(badge).toHaveTextContent(/no wallet/i);
+    });
+  });
+});