It’s common for companies to mistakenly enter into business contracts with the wrong parties signing agreements.
Officer Or Individual Signatory?
If your business is set up as a corporation, limited liability company (LLC), or similar entity, you’ll want to make it clear that the person signing is doing so on behalf of your entity, including identifying the title that person holds with your company (e.g. John Smith, President).
The failure to do so can lead to misunderstandings, including potential individual liability for the person signing the contract.
The Missing Third Party
Do your business contracts require action by a third person or entity in order to ensure performance occurs? In many cases, it makes sense to add that third party to the contract so everyone is on the same page. Of course, this means also getting that party to sign the agreement. You can’t just identify them by name in the agreement and assume that’s enough to make them legally responsible for anything within it.
Minors As Parties
For many types of business-to-consumer (B2C) transactions, a minor’s signature is virtually useless because the contract is void on its face or voidable at the minor’s option as a matter of public policy.
Although it’s nice to get the minor’s signatures on these agreements simply as a means to remind the child of responsibilities, in most cases, you’ll want to get the signature of a custodial parent or legal guardian.
Spouses And Business Contracts
Whether it’s the sale of stock in a privately held company, real estate lease, or purchase of a vehicle, too often business agreements fail to include the spouse as signatory. Do not assume that a single name on a title or stock certificate means one individual is the sole owner of that asset. In many cases, the spouse has an ownership interest too that requires the spouse to become a party too so that the purchase or lease is clean.
An experienced business lawyer who focuses on transactions can prepare the business contracts you need, including getting all the parties correctly identified in the agreements. And if you’ve got existing agreement templates you use during the course of business, perhaps it’s time for a legal review to ensure the right parties are included in each deal.
