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Always, wondered this, and never found a good answer. Guess the opposite applies, too -- how do you know someone does NOT have the right to enter a legal agreement on behalf of a company?

Please cite sources: US Federal Law and/or Case Law

Thanks!

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1 Answer

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You don't know, though sometimes you can do research to gain comfort.

In practical terms, one relies on:

  • The signing individual's representation that s/he has authority to bind the company. If that representation proves to be false, you can go after him / her personally.
  • The fact that, under certain circumstances, an individual with apparent authority can bind a company, even if s/he did not have actual authority. Please see "Who Can Sign a Contract for a Corporation?"

Disclaimer: This post does not constitute legal advice and does not establish an attorney-client relationship.

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@Dana Shultz: Thanks, that's the same answer I've come to in the past, but nice to know it still holds true. Cheers! – blunders Oct 22 '10 at 22:02

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