Authorization to Sign on Behalf of the Company
Authorization to sign on behalf of the company is the legal permission for an individual to sign official documents for a separate legal entity.3 min read
Updated July 8, 2020:
Authorization to sign on behalf of the company is the legal permission for an individual to sign official documents for a separate legal entity.
When you form a business as a corporation, the company becomes a separate legal entity. Your name is no longer valid when you're signing contracts between the business and another party. Representatives must be authorized to sign for the company. These representatives can include board members, managers, and other personnel. If an employee who isn't authorized signs a document or contract on the company's behalf, this can cause legal troubles.
Not every employee is an authorized business representative. Someone who doesn't have authority to make important business decisions shouldn't be signing legal documents or contracts for the company. Managers with more responsibilities, such as a manager who serves as a corporate officer, may be authorized by the owner of the business to sign.
If a manager does have this type of responsibility in the operations of the business, it is common for them to sign a business contract. However, the other involved party might ask for proof that the manager signing has authorization to handle this task on the company's behalf. Contracts are critical to the success and growth of companies across many industries, especially contracts that help keep the company in business.
As a company grows in size, it tends to require more contracts in various applications. Examples include:
- Rental and lease contracts, for renting or leasing office space
- Partnership contracts, for adding more owners or investors
- Employment contracts, for hiring employees
- Joint venture contracts, for combining with other businesses
If you are entering into a contract with a business or individual in another country, it's important to make sure the contract is signed by someone who is authorized to do so. You must verify that the person signing a contract is authorized to avoid major legal trouble and minimize risks. If you're signing a contract with a company or individual based out of Indonesia, the laws governing the legality and binding nature of contracts are found in the Indonesian Civil Code, Article 1338.
To avoid legal issues, it's important to be sure that the signature on the contract is from someone authorized by the business to sign. If you wish to authorize people in your company to sign legal documents on its behalf, you must make sure to do so legally.
How to Sign
The first step in signing on behalf of a company is making sure to clearly state that your signature is representative of the business. You will sign your name and indicate that the signature represents the business, not your personal capacity to sign. It might help to include your title with the company near your signature or note that you serve as a corporate officer. Some contracts include a line beneath the signature where you can enter your professional title.
Most corporation owners choose to limit the authority to sign legal documents to corporate officers only. These individuals typically know the most about the business and take part in the decision-making process. If your company roster includes a manager who is involved in major decisions for the business, you might choose to upgrade their title to the secretary of the business, treasurer, or other corporate officer.
When you are drafting business documents, make sure the language is clear and concise to protect against signing by those who aren't authorized to do so. For example, the corporation's articles of incorporation should include a list of corporate officers who are authorized to sign. You might choose to have your employees sign contracts that detail whether they are authorized to sign legal documents for the business. If an employee is authorized to assign in a specific circumstance, you may want to draft a power of attorney that includes the details of this authorization.
Representation of Authority of Parties/Signatories Clause of a Contract
In a contract, the clause titled “representation on authority of parties/signatories” states that all who sign the agreement are authorized to bind both parties to the terms outlined. Signing a contract isn't like getting an autograph from a famous person. The signature is legally binding on a legal document so it's critical to be sure that the signature is authorized by the company owner to make business decisions.
If you need help with authorization to sign on behalf of the company, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.