When you start a business, the business becomes a separate legal entity. This means that you can no longer sign contracts in your personal capacity. Instead, signing contracts on behalf of a company requires an authorized representative – someone who has the power to legally bind the company in an agreement. Who qualifies as someone who has the right to sign on behalf of a company? The question of “who can sign contracts on behalf of a company” is more complex than it seems at first glance. This question is about the level of authority an individual possesses. Authority is based on two factors, the authority desired by the employer and the authority expected or perceived by third parties. In this context, authority is a function of agency law. What is the level of authority of an employee (an agent). The context of this discussion is whether the employee has the authority to sign a contract as a representative of the client (employer). Below, we discuss the types of powers that exist under the Agencies Act and how this affects the business. When you start a business as a business, the company becomes a separate legal entity. Your name is no longer valid if you sign contracts between the company and another party.
Representatives must be authorized to sign for the company. These representatives may include members of the board of directors, managers and other employees. If an employee who is not authorized signs a document or contract on behalf of the company, it can lead to legal problems. Signing a contract correctly may seem like a simple procedure, but there are some details that an authorized agent needs to know, such as: Sometimes you want to allow an employee to sign a specific contract or type of contract, but not all contracts. This may be true if the employee is located in a different geographical area or is responsible for a specific part of the company. A great way to do this is to have a power of attorney document that carefully delineates the types of documents the employee can sign. The parties do not necessarily have to sign the same copy of the contract for it to be binding. If the parties sign different copies of the contract, they must agree that each of their signature pages together constitutes a complete signed agreement. For this reason, contracts often include a provision stating that “the parties may perform this contract in consideration, each of which is considered original and which are all but an agreement”. Thomas F. Harrison has developed and managed a variety of successful start-up editorial products for lawyers and other professionals, and has served as editor and publisher of the second best-selling legal journal in the United States. He is also the author of a book on the opioid crisis, The Complete Family Guide to Addiction, published by Guilford Press in 2019.
More recently, clients have asked about which securities to accept for signatures in limited liability contracts, such as . B a corporation or llc (each, the “Company”). Should you only accept the signature and title of “executive member” for an LLC? Should we automatically accept the signature of the “president” of a company? What is the authority of a member, executive member, president, vice-president or CHIEF Executive Officer of an LLC or corporation? We all want to avoid the legal or financial problems that can arise if a contract is not concluded and signed correctly or is not binding on the company we are thinking of doing business with. Not all employees are authorized representatives of the company. Someone who is not authorized to make important business decisions should not sign legal documents or contracts for the company. Managers with more responsibilities, such as . B a manager acting as a business executive may be authorized to sign by the business owner. The best course of action is to include any changes in the signing version of the contract.
This will ensure that there are no misunderstandings about what the parties wanted to sign. However, if it is not possible to have a contract reviewed and reprinted before signing it, make sure that any changes made to the contract in person are initialled by each party. If the contract has gone through a series of rounds of negotiations or revisions, don`t just assume that the copy presented to you for signature is what you think. Before signing it, absolutely make sure you know and understand the terms of the document. Under Michigan law, you are usually bound by a contract that you sign, even if you have no knowledge of its contents. Unless you can prove that the other party committed fraud or other misconduct in the preparation of the contract or in the request to sign the contract, you must comply with it. When thinking about which signatures to accept, it`s important to be careful. While securities can be a reliable indicator of a person`s authority, you should always do your due diligence and verify a potential signatory`s authority to sign or bind their business to an agreement. .