When you start a business, the business becomes a separate legal entity. This means that you can no longer enter into contracts in your personal capacity. Instead, signing contracts on behalf of a company requires an authorized representative – someone who has the right to legally bind the company in an agreement. Only who qualifies as someone who has the right to sign on behalf of a company? If your business is growing and growing, it is essential to ensure that all statutes and laws relating to the company`s decision regarding signing authority and other company decisions are respected. For a business to succeed, it is essential to ensure proper entity management. Gone are the days when a single company secretary or lawyer could handle such cases. Tina, as she was called during the affair, was the director of Autumn Tree, a real estate development company. Tina has signed an agreement to sell the company`s core real estate assets to Bishop Warden Property Holdings Limited, at a price well below its value. The buyer checked Autumn Tree`s commercial register, that Tina was apparently the only director. A company may designate certain officers who have the right to sign on behalf of the company. This is a good idea, as it makes it clear that anyone who is not on the list does not have the necessary authorization to sign on behalf of the company. In a decision of the Supreme Court of 25 May 2020, it was found that a company could enter into a contract with any person acting with the explicit or tacit authority of the company and on behalf of the company (section 126) and that it could also enter into a contract without using a common, optional label (section 123). In this case, a director of the applicant company signed the subject matter of the contract itself, without the signature of another holder (in accordance with the requirements of § 127).
The Court stated that, in a contract, the clause entitled “Representation of the parties/signatories” stipulates that all those who sign the agreement have the right to bind both parties to the conditions set out above. Signing a contract is not like getting an autograph from a famous person. The signature is legally binding for a legal document, so it is important to ensure that the signature is authorized by the business owner to make business decisions. This is especially important for people who operate LLCs with a single member. If you do not specify that you are signing on behalf of the legal entity, you may be personally responsible for the performance of the contractual conditions in the event of a problem. To enable your business to use technology to ensure that all routine but important business data is managed appropriately, efficiently and efficiently, contact a Blueprint representative today. The first step in signing on behalf of a business is to make sure your signature is representative of the business. You sign your name and indicate that the signature represents the company, not your personal signing capacity. It may be helpful to make your title near your signature with the company or note that you are a corporate agent. Some contracts contain a line under the signature in which you can enter your professional title. When a company is small, has been working in the same company for a few years and has experienced staff used to dealing with these problems, there is usually no problem. Indeed, even if there are no established processes, everyone knows who is doing what, and this has been ratified by corporate decisions that give the parties involved the necessary authority.
As a general rule, a company director, president, or managing partner of an LLC is considered an authorized representative, unless the company has expressly adopted a statute or other rule to the contrary. . . .