So a Corporate Seal Can Be Relevant!

I’ve previously written, most recently here, about how contracts under seal can unfortunately have implications regarding consideration and statutes of limitations.

But I exhumed from a comment (the most recent one) to this 2009 post on AdamsDrafting another way that seals can be relevant. This one relates to corporate seals—you know, those oh-so-impressive embossed impressions made by embossers that come with corporate minute books (and are invariably never used).

More specifically, section 107 of the New York Business Corporation Law says, “The presence of the corporate seal on a written instrument purporting to be executed by authority of a domestic or foreign corporation shall be prima facie evidence that the instrument was so executed.” So for purposes of a contract governed by New York law, presence of a corporate seal would shift the burden of proof to whoever would argue that the person signing for that entity lacked authority.

Has this law prompted any of you to break out the corporate-seal embosser? Does a comparable law exist in other jurisdictions? And here’s the drafting question: if you propose using a corporate seal, should you make that clear by putting “Put corporate seal here” or some such next to the relevant signature block?

[Update, 11:45 a.m. EDT, June 26, 2012: @theContractsGuy and InhouseChem alerted me to the important of corporate seals in Chinese law. Go here and here for accounts by others on that subject.]

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.

1 thought on “So a Corporate Seal Can Be Relevant!”

  1. Ken, the New York law looks familiar to an English lawyer and may well share a common origin.  See  section 74(1) of the Law of Property Act 1925 which reads as follows:

    (1)In favour of a purchaser an instrument shall be deemed to have been duly executed by a corporation aggregate if a seal purporting to be the corporation’s seal purports to be affixed to the instrument in the presence of and attested by—
    (a)two members of the board of directors, council or other governing body of the corporation, or
    (b)one such member and the clerk, secretary or other permanent officer of the corporation or his deputy.

    This old law has to a large extent been overtaken by provisions in the Companies Act 2006 and in other legislation that avoids the need to have a seal for most types of corporation and individual, but is still particularly relevant for certain “odd” types of corporation such as universities incorporated by Royal Charter and Government departments.  Some of our university clients regularly use their seals when they execute contracts as deeds (specialties as was, in the dim and distant past), although this can be rather a faff as the constitutions of UK corporations often impose layers of formality around the internal processes for using the seal, making it difficult to apply the seal at short notice.


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