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Business Contracts: Do You Make These 4 Costly Signature Mistakes?

By January 6, 2014September 21st, 2017Business Contracts, Business Lawyer

business contracts signaturesWhen you’re running a business, it’s important to make sure you protect yourself legally when it comes to signatures in business contracts, other legal documents, and emails.

Here are four of the common errors that can be easily avoided.

Mistake #1 – Not getting a signature on a binding written agreement.

The top signature mistake made in ecommerce is relying upon a series of informal emails to “paper” a deal. Taken together, the emails are more of a wish list rather than a contract between the parties.

To avoid costly misunderstandings, get a written agreement in place that contains all of the key terms rather than winging it through emails.

Mistake #2 – Creating business contracts by accident.

The flip side of the top error is creating a binding contract through emails even though you didn’t mean to do so.

Related Article – Business Contracts: Why You Should Avoid Email Deals

This mistake typically happens when someone proposes a business transaction by email and the recipient of the proposal responds with positive language that can be taken as an acceptance (a “yes”) rather than a willingness to consider or negotiate with the proposal as the starting point.

One possible solution is to include a disclaimer below your email signature that makes it clear that your signature in your emails does not create a binding contract.

Mistake #3 – Becoming personally liable for a business deal.

Business owners (and their employees) sometimes err on the side of being too friendly by omitting the context in which they are signing agreements and even their emails. This can lead to becoming personally liable on a binding contract rather than having the entrepreneur’s corporation or limited liability company (LLC) assume sole responsibility for the deal.

Never permit language that suggests you’re personally on the hook for your business deals unless you intend to be held liable as an individual.

In addition, when you sign contracts and emails on behalf of your company, be sure to make it clear that you’re doing so for the business instead of as an individual.

Example: If you’re the president of your business, you would include your title and your company’s name as part of your signature.

Mistake #4 – Accepting the wrong signature at face value.

Although it would be nice to trust everyone, too often business owners erroneously assume that the person they’re dealing with online has the authority to represent the business they’re claiming to own or manage.

Unfortunately, you cannot assume that the person you’re dealing with in ecommerce has the legal authority to conduct business with you.

Related Article – B2B Contracts: How To Avoid 4 Common Mistakes

A person claiming to represent another company could be a con artist unrelated to the business or simply someone who works for the company but is not authorized to enter into business deals with you.

If a business transaction is important to you, verify that the person you’re dealing with has the authority to sign off on a legally binding deal. To verify identity, make sure signatures are notarized or use an online electronic signature service that handles verification.

These four mistakes account for most business signature errors that are made in ecommerce today. By avoiding these signature mistakes, you can save yourself the time and money of cleaning up a legal mess later.

Now, naturally, a good place to start in protecting yourself is having your company email signatures and business contracts professionally reviewed to ensure you’re protecting yourself. For more information on how we can help you get the agreement you need, check out our flat fee Business Contract Legal Protection Package.

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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