Business owners are constantly presented with agreements to sign to manage relationships with partners, contractors, vendors and others. It may be tempting to simply sign on the dotted line when your business is presented with one contract after another. Instead, you should study the signature block carefully to ensure that you are signing on behalf of your company appropriately. The following steps on how to sign a contract can help keep you on track!
Who Should Sign:
Do you have the proper authority to act on behalf of your company? For instance, if you are a member of an LLC, depending on the terms of your operating agreement you may or may not be entitled to bind the LLC legally. But if you are the sole owner or you have a partner and both of you share management rights equally, you are all clear to sign off.
How to Sign:
Whatever you do, if the agreement is in the name of you company, do not sign your name without reference to your role in the company. You want the agreement to bind your company and not you personally. One of the benefits of forming an entity is its ability to assume some liability for its acts. You are signing on behalf of the company and that is how it should be written. Some options include:
“First Name Last Name”
Your Title, ABC Company
“First Name Last Name”
In the capacity as Your Title, ABC Company
When to Sign:
Depending on whether your company or the other party drafted or presented the document for signature, you may not be in a position to determine who signs first. If I am responsible for creating the draft of the agreement, I prefer that once it is final, the other party signs first. I feel it allows some control and helps ensure that the final draft meets your expectations. It gives you that last chance to review before you sign it and it becomes a legally binding document.
Hope these steps provide some useful guidelines for your business. Now you’re ready to make a deal!
These are some basic tips for signing an agreement and is provided for general informational and educational purposes. It does not constitute legal advice or legal opinions. An attorney-client relationship is only established with the firm via a formally, mutually signed engagement agreement.