Christy Funsch23


Authority To Sign Agreement On Behalf Of The Company

However, to prevent this from happening, the company must take certain corrective action to prove to others that they do not feel that the agent signing the contract does not actually have the powers that go beyond what was originally denied to them when the contracts were signed on behalf of the company. Some of the steps include the person who is dealing with the company, upon request. If the measures are not implemented, the company will be bound to such an instrument and therefore will not be discouraged from denying it (Australian High Court judgment in Northside Developments Pty Ltd/Registrar-General e.a. [1990] 2 ACSR 161). The third type of power to sign a contract on behalf of a company – so-called authority – is also the most appropriate example. An employee may have the real or tacit power of his company to enter into a contract with another party. The staff member does so and then signs another contract with the same consideration. The company may have given the worker the power to enter into the first contract, but the worker did not have any special authority to enter into the second contract. The law would mean that the lack of authority to sign the second contract does not matter: the party, on the other hand, has the right to assume that the worker had the power to enter into the second contract because he or she had the power to enter into the first contract. Not all employees are a licensed agent. Anyone who is not empowered to make important business decisions should not sign legal documents or contracts for the company.

Executives who have more responsibilities, z.B. an executive who acts as a business manager, may be allowed to sign by the business owner. If a business is small or concentrated — or both — it may not happen that often. It can be easy for one or two people to manage one of these types of agreements. However, when a business grows and develops geographically, it can become more complicated. Agent Choo had stated that he was clearly entitled to act on behalf of CEPCO, the company at issue in this case, to conclude the administrative agreement. This was also supported by the actions of CEPCO staff and its Board of Directors who supported Choo`s representation, such as Choo`s appointment to CEPCO`s Board of Directors and Choo`s opportunity to chair board meetings. This section will consider whether, if it is established that the signatures were made without the authority of the company, whether the company can invalidate the performance of such instruments and that, therefore, such instruments would not be binding on the company, it will be a strong legal protection in the event of repeated transactions with a client. In most cases, the third party would have had such an impression of the behaviour of the person acting on behalf of the company, either by its role and extent in the contract, or by its position in society. In most areas, third parties will not verify or confirm this power in writing. That is where most of the problems arise.

It could be a deal maker or a deal breaker. As this is a complex subject, we advise you to contact us. We help you understand the authority you have and the authority they have. In conclusion, a contract is effectively signed on behalf of a part of the company if the signatory has one of three types of powers: a real, tacit or alleged power. It is rare that an employee who acts in good faith on behalf of a company does not be in at least one of these categories.