The legal name on contracts is the registered, official name of the individual or corporation taking part in the agreement. When both parties sign a contract, it becomes legally binding. For this reason, it's important to make sure that you use the correct, legal names of each party when creating a business contract.

Types of Legal Names

The person who must legally sign a contract varies depending on the business entity in question.

  • General partners or their authorized agents can sign on behalf of a partnership.
  • Owners of a sole proprietorship must sign a contract with their individual legal names.
  • Because a corporation is a distinct entity from its owners in the eyes of the law, the business itself has the power to enter contracts after registering with the state. If you are authorized to sign on behalf of the corporation, you can sign using the business's legal name.
  • Limited liability companies (LLCs) and limited partnerships (LPs) must sign using the names that are on register with the secretary of state office.

Doing Business As Names

A doing business as (DBA) name is a fictitious business name sometimes called a trade name that is used to run a business. In most states, if the DBA name is different from the names of the owners of the business, it must be registered in the jurisdiction in question. When a DBA name is registered, it should be used on contracts as the business's legal name along with the legal names of those authorized to sign on behalf of the business.

In most cases, the DBA is written after the signor's legal name to provide all parties with the information that the company operates under this name. Some corporations have DBA names that are different from the name they commonly use in commerce.

Relevant High Court Decisions

Two High Court decisions illustrate that even when a legal name is not used in a contract, the agreement may still be valid as long as clear intention is displayed. However, it's best to get it right when you initially draft the contract.

The 2013 case refers to a contract between Liberty Mercian Ltd. and the defunct company Cuddy Civil Engineering Ltd. The former intended to contract with Cuddy Demolition and Dismantling. The court considered the contract's background and documents such as the warranty, invoices, payments, and letters of intent. These documents included both the correct and incorrect names as well as a third name, Cuddy Group. Because of the wide-ranging discrepancies, the court found that the contract was not valid as written.

In another 2013 case, a contract named Climate Change Group Limited, a dormant company. However, this was found to be a clear mistake with documented intention, and thus the contract was allowed to stand and was revised accordingly.

As these decisions illustrate, most courts will consider the intent and documentation behind the contract in addition to the letter of the contract itself. Previously, the Court of Appeals did not take these steps and voided contracts that were not written to the correct party even when intention was present.

Even if you make a mistake in the legal name of a person or entity when drafting a contract, the court will objectively decide whether your intention is clear. However, you should do your due diligence by confirming the legal name of the individual or company with whom you are contracting prior to submitting a draft.

Protecting Liability

If you want to protect your personal assets from business liability, you can do so by forming a corporation or an LLC. If these entities are sued, the owners are not responsible for the resulting judgment. However, exceptions exist and liability may not be upheld by the court if you use your name and the legal name of your business interchangeably.

Simply being careless can put your assets at risk. Whenever signing a business contract, use your complete legal business name. If you have incorporated, your business is its own entity and should be treated as such in the contract. Your legal name as an individual should not be listed. Make sure that if another entity presents you with a contract that all legal names are written correctly.

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