Legal Question in Business Law in California

Is it possible for the majority of partners of a corporation to sign on a business loan but not all of them?


Asked on 2/06/17, 1:54 pm

1 Answer from Attorneys

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

First, corporations don't have partners. Instead, they have directors and officers. The authority of the directors and/or officers to borrow is usually specified in the corporation's bylaws. If the bylaws don't say who has the power to borrow money, to incur debt, or something of this sort, then I'd say that if the loan amount was relatively small in relation to the corporation's capitalization or current net worth, the person(s) serving as president or chief financial officer would have implied authority to take out the loan, but that if it were relatively large and not "in the ordinary course of business," then prior authorization by a majority of the board of directors would be required. Note that authorizing the corporation to enter into the loan is one thing, and signing the loan documents is another. What I'm discussing is the former, i.e. the authority to borrow. The persons who actually sign the loan documents will probably be determined by the lender, and the lender will generally require the borrower's signatory(ies) to state in the loan agreement that they are "hereto duly authorized" or words to that effect.

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Answered on 2/06/17, 5:00 pm


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