QUESTION: Who is supposed to sign contracts with
vendors? An attorney once told me that any board member can sign a
contract, so long as the board approves. Our treasurer insists the
president is the only one who can sign the contract. Who is correct?
ANSWER: The attorney is correct.
One Signature. A
contract signed by any officer, whether authorized or not, will be
deemed valid if the vendor reasonably relied on the signature. In addition, an association can be
bound by a single signature or no signature if the association partially performed the
contract's obligations, or accepted the
benefits of the contract, or subsequently ratified the contract in its meeting minutes.
Two Signatures. How can vendors protect themselves from a rogue director signing agreements? The
Corporations Code calls for two signatures from officers--one signer
being the president or vice president and the other one the secretary or
treasurer. (Corp. Code §7214.) In
the event the corporation were to challenge the authority of the
signers and attempt to void the contract, the signatures of two
provides a conclusive...evidentiary presumption of authority on the part of the specified
corporate officers to execute the document in question on behalf of the
corporation. (Snukal v. Flightways Manufacturing, Inc. (2000) 23 Cal.4th 754, 783.)Minutes.
If officers wish to protect themselves
against claims they acted without
authority, they should ensure meeting minutes record the board's
approval of the contract and
their authorizing of officers to
Signature Blocks. To protect
officers against the perception they are personally signing a contract on
their own behalf (making them personally parties to the contract), the signature
block should have the name of the association as the party followed by the name and
title of the officer signing on behalf of the association. For example:
The Sunrise Homeowners Association, Inc.
John Doe, President
makes it clear the HOA is a party to the contract, not the
president. There should be additional language in the opening paragraph
of the contract identifying the association, not the officers, as parties.
: To avoid expensive legal problems, all contracts should be reviewed by legal counsel. To reiterate, ALL contracts should be reviewed by legal counsel
: Associations needing legal assistance can contact us
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