An incorrect signature can have major consequences on a compay’s liability for a contract so you should ensure you get it right. There principles are different depending on the entity you are representing.
- For a sole trader you are signing in your own right, ie John Smith as “John Smith” so there is little doubt as to the authority. There is a variation if you are signing under a trade name in which case you should sign “for and on behalf of” ie John Smith for Smiths Butchers. If another person signs “for and on behalf of” the business the seller should ensure that that person does actually have authority of the contract may not be enforeable.
- For a partnership, each partner may sign as a “partner” of the business, non partners should follow the same principle as above.
- For a Limited company, the officials of the company should sign as director or company secretary as appropriate.
- For a Limited Liability Partnership (LLP) the partners are known as members and should therefore sign as “member”. There is an unusual arrangement for LLPs where the partner can be a Limited company or indeed another LLP, these are known as corporate partners and were the issue that started this post. A person cannot sign for a corporate partner as they are different legal entities and I received the following response from Roy Carlo of Sugiyama & Co regarding this specific point:
If he is signing on behalf of one of the Ltd companies, he should sign it as “Fred Bloggs, Director, for and on behalf of X Co Ltd.” He/she would need to ensure that they have proper Board authority to commit the company to whatever is being signed, particularly if there are financial implications. Although it is probably implicit from their status as a statutory director, they would be binding the company by signing the document and, if they do not have the necessary authority, the company would in all probability still be bound by the document (on the basis of ostensible authority), but it could put the Director in an invidious position!
If another person such as a manager or employee signs “for and on behalf of” the business the seller should ensure that that person does actually have authority of the contract may not be enforeable.
This article may not apply to your specific circumstance so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting, Gravesend – Accountants who “speak your language”