4.Contract Drafting, Review and Negotiation

|Q9 (Signing Authority)

Is it OK for a general manager of a department to sign a contract instead of a representative director?

When a company becomes a party to a contract, it is important to know whether or not the individual signing the contract has the authority to do so. Since a company’s representative director has the authority to represent the company as a matter of law (Companies Act Article 349, Section 3), in most cases it is safest to obtain the representative director’s signature.

However, an employee such as the general manager of a department or section can be delegated the authority to sign a contract (Companies Act Article 14, Section 1). But it is typically not possible for an outside party to know whether or not the signing authority has been delegated. So if you receive a signature from an employee such as the general manager of a department or section on a material contract, if is safer to take precautions to confirm that the signing authority has been delegated under a power-of-attorney or otherwise.

(Posted: January 27, 2012)