July 3, 2010 One Person Signing for More than One Party?
A reader recently asked as follows: If someone is signing a contract on behalf of more than one party, and that person serves each party in the same capacity, would it be OK to use just one signature block, as in the following example?
ACME HOLDINGS, LLC
ACME ACQUISITIONS, LLC
ACME INVESTMENTS, LLCBy: ______________________
Richard Roe
President
I responded that I’d feel more comfortable with the above arrangement if you added the notation “on behalf of each of the three above-named entities,” or some such. But saving a bit of space and sparing the signatory the ordeal of signing a couple of extra times seem negligible benefits. I have no plans to use such a three-for-one arrangement. But what if one person was signing for, say, six or more parties? Hmmm. Does that ever happen? If anyone can point to a publicly available contract that uses this technique, please post a link or email me a pdf.
July 3, 2010 at 6:15 pm
It often happens in, say, a securities offering where one executive is signing on behalf of all of the subsidiary guarantors of a company. Seems worth it to me; is there a real concern that a particular subsidiary guarantor might be held not to have executed the agreement?
July 3, 2010 at 11:11 pm
For the position under English law, see section 44(6), Companies Act 2006: "Where a document is to be signed by a person on behalf of more than one company, it is not duly signed by that person for the purposes of this section unless he signs it separately in each capacity." In other words, you need to have separate signature blocks for each company.
July 5, 2010 at 7:50 am
Mark, Thank you for that info!
July 5, 2010 at 12:53 pm
Gregory: No, I don't think it creates an enforceability problem. It's just that until a sufficient number of parties are involved, the drawbacks of deviating from the standard arrangement outweigh the benefits. I haven't given much thought to what a sufficient number might be. Ken
July 22, 2010 at 10:24 am
If it doesn't create an enforceability problem, what are the drawbacks of deviating from the standard arrangement?
I have one large corporate client with numerous subsidiaries (over 20) which all have to sign financing agreements and other agreements – we always have individual signature blocks for each entity even though the same person is signing on behalf of all of the companies. I would love to list them all and have the principal sign once, but I highly doubt banks and other investors will accept that approach.
July 22, 2010 at 2:45 pm
DavidBags: The path of least resistance is to apply the same approach across the board, unless doing things differently provides sufficient benefits. In your case, it might be worth it to use the one-signature-block approach, but as you suggest, banks are unlikely to go for it, as they're vastly risk-averse. Ken