More Contract Answers

Our legal expert answers another reader question about contracts

Who should sign contracts?

Under the contracts law, the individual who signs the contract must have the authority to bind the party. If it is an individual who is entering into the contract, then that person is the proper party to sign it. When dealing with corporate entities, partnerships, and the like, then an officer or agent with authority must execute the agreement.

Many bylaws for not for-profit-organizations -- associations and professional societies -- specifically delineate who has the authority to bind the organization. Many times the board of directors will delegate that responsibility to another party.

When using a third party to act on your behalf, more than likely they will sign a contract as "agent for" the organization they represent or require the someone in the organization to sign. When dealing with an agent, it should be verified that the agent, in fact, is duly authorized. Remember that under the law of agency, the agency can be terminated but you cannot deprive the agent's compensation earned up to the point of termination of the agency authority.

On the flip side, if you are an independent planner, it is best to get someone from the host organization to do the signing, to keep yourself at arm's length from any possible legal proceedings. If you do decide sign, do so as "agent for" the host.  The key is if you sign make sure someone else is responsible or be prepared to have it be you.  In some situations, incentive programs for example, the incentive house will sign since they are marking things up, etc. and selling the "package."

I strive to get someone as high up in the organization as possible to sign contracts to avoid the potential defense that the person signing did not have the authority to do so. With hotels, I always try to get the general manager to execute the agreement. Otherwise a vice president or director of sales will be the person who normally signs it -- it's better yet to get them all to sign. If there is a past pattern and practice of a person signing contracts which are then performed it will be hard for the other side to subsequently contend that that person did not have authority to sign.