The concluding clause often says that the people signing the contract have been “duly authorized.” This is what MSCD says about that:
The body of the contract is a more sensible place than the concluding clause for statements of fact regarding authorization. But more generally, if you’re concerned whether the individual signing for the other party is authorized, having the contract state that they’re authorized should provide no reassurance. Instead, ask for confirmation, for example a board resolution.
In most commercial contexts, a board resolution would seem like overkill. I’ve asked around for other ways to address this issue, with little success. Until now. Here’s what André Zielke, a procurement specialist with the Government of Nova Scotia, said in an email to me after the recent “Drafting Clearer Contracts” seminar I did for them:
During the seminar, we chatted about how to make sure that whoever is signing a contract for the other party is authorized to sign.
As I mentioned, when I worked in a previous position in Germany, it was our practice that as soon as we began negotiations with a major supplier, we would ask them to provide us with a list of authorized employees, including specimen signatures and a statement of the scope of each person’s authority. We would subsequently use the list provided by a supplier to quickly determine whether a given contract with that supplier had been signed by an appropriate person.
I never encountered a supplier that was unwilling to provide such a list.
That seems like a great way to deal with this issue. What do you think?
I recently saw the issue addressed more assertively than usual. In a contract between a government agency and a vendor, the vendor’s signature block had this under it text that, among other things, said that anyone “who makes a false representation of authority may be subject to criminal prosecution” under a specified statute.
That might well make someone think twice about blithely signing a contract without checking on authorization, but I see two shortcomings. First, I suspect that when authorization is a problem, usually it’s not because the person signing intended to deceive the other party, but because the person signing wasn’t aware what authorization was required. And second, a remedy against the mook who signed the contract presumably wouldn’t be much of a remedy.
So an ounce of prevention is better than a threat of criminal prosecution.