Legal Question in Business Law in California

can an agent of a non profit 501(c)3 enter into a contract for services.


Asked on 4/08/14, 6:22 pm

1 Answer from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

This question really doesn't provide enough information. One of the things that agents often and customarily do on behalf of their clients is enter into contracts. Indeed, a corporation cannot enter into any contract without using the services of an "agent," since corporations are inanimate and can only act through humans, such as their officers, who are a class of agent.

Whether Agent "X" can make a contract on behalf of Corporation "Y" which is binding on the corporation is a more difficult question to answer in broad and general terms. In a law school text on the subject of agency, there will be at least one full chapter dealing with the authority of an agent to bind his/her principal. There are instances where an agent acts beyond the authority actually given to and possessed by him/her, but the actions nevertheless are binding upon the principal.

Finally, I'd think that the fact that the (apparent) principal here is an IRS 501(c)(3) nonprofit is of relatively little relevance. Whether an agent has the power to bind a corporation to a contract is not much affected by whether the corporation is a nonprofit or a regular for-profit business corporation. I can't say it never makes a difference, but not generally.

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Answered on 4/08/14, 6:36 pm


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