Business Contracts Entered into on Behalf of Your Company Should Identify Your Company, and not You, Individually.

Many people don’t understand that by signing a business contract in your individual capacity, in that instance you are essentially voiding the protection from personal liability which exists through corporations and LLCs. When you sign a contract that names you personally, you become personally liable for the obligations under the contract.

The bottom line is that if you are entering into business contracts on behalf of your company, only your company should be identified in the body of the contract as well as at the signature line. Of course you can sign on behalf of your company, but your title should always be listed alongside or underneath your name in the signature block, with your company as the signatory.

See the following examples.

Both examples identify the business as the signatory, and include the signer’s title as a representative signing on behalf of the business. I personally prefer the upper style of signature block, which identifies the business above the signature lines. I think it provides more clarity and reaffirms that the business, not the individual, is the signing party.

Far too often you see contracts that mix up their identification of parties – i.e. they may identify the business up top in the body of the contract, but then they fail to identify the business name at the signature line, which often look something like this:

In this instance, if John Jones signs on the line, even if his company is identified in the body of the contract, he will become personally liable for the obligations in this particular contract.

The proper identification of parties in the contract and at the signature block is an extremely important element of any contract, and should not be overlooked. Otherwise, your personal home, investments, and other belongings could be on the hook to satisfy any unfulfilled obligations under the contract.

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For more relevant information, see these articles below…….

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