Contracts are key for business. They clearly lay out what each party is going to do as part of the agreement. Hopefully, this should mitigate any issues before they arise. So that poses the question, “who can sign contracts “on behalf of” a company?”.
First of all, it’s important to understand that a limited company under UK company law is its own legal entity. This means the company itself can sign a document. In fact, it can be done in three ways:
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- With two “authorised signatories”
- With one witnessed director signature
- By affixing its common seal (this doesn’t happen often!)
These methods are not “on behalf of”, they are actually the company signing. Signing “on behalf of” the company is different.
What does “on behalf of” actually mean?
According to UpCounsel, “on behalf of” means the legal permission for an individual to sign official documents for a separate legal entity. Therefore, an individual can sign documents for the company, i.e. “on behalf of”.
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Of course, not just anyone can sign “on behalf of” the company. The individual doing so must have the relevant authority.
So, who can sign contracts “on behalf of” a company?
If the individual is not a director of the company, then you should obtain written authority. This should come from the board of directors stating that they are able to sign on behalf of the company. Without this, the signature may not be valid.
We say “may”, because in some cases it could still be valid. For example, if a senior employee has negotiated and signed the contract as part of their role, they may have authority. This is known as implied or apparent authority. In this case, it would be reasonably necessary for the senior employee to have the authority to sign. Implied authority is a complex issue. As such, it is usually considered on a case-by-case basis.
A formally appointed director would be expected to have implied authority as a minimum. This would give them the power to sign “on behalf of” the company. Getting a director to sign is usually the best course of action for day-to-day contracts from a compliance perspective.
How can I check if they are a director?
The best way to ensure you have a director signing your contracts for UK registered companies is to use Companies House. Simply go to Companies House and search for the company you are sending the document to. Once you’ve selected the company name, click on the ‘People’ tab and it will provide you with a list of the directors. You can now be comfortable that an authorised director is signing your documents.
Can I automatically look up director names for my contracts?
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If you are manually updating contracts in Word this may be difficult. But with Doc2, it’s super easy. You can pull live company data directly into your contracts. Then, automatically look up the names of all of the directors. Not only is this more efficient, but it adds a great deal of peace of mind too!
See how it works with an NDA in the video below:
To create your contracts and documents like this, why not try a 14-day free trial of Doc2?
You can read more about who can sign other types of contracts in this article by Stevens & Bolton.
Source: https://t-tees.com
Category: WHO
