Legal Question in Business Law in California

If I sign my name on the By: line and put my title on the ITS: line on behalf of the company.

I'm wondering if anything happens to the company will I be the responsible party, since I'm just an employee signing on their behalf.

Please advise................thanks

Asked on 7/01/13, 1:17 pm

3 Answers from Attorneys

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

Usually, when corporate officers sign contracts on behalf of the corporation, they are not and will not become personally liable. There are exceptions, however. One would be instances where the instrument signed was fraudulent in itself, or the inducement to the other party to sign was fraudulent, and the officer signing knew of the fraud. Another exception to the general rule of no personal liability would be under the "alter ego" or "piercing the corporate veil" theory, where corporate owners, directors or officers (not necessarily the one signing the instrument) are held personally liable because of some defect or deficiency in the way the corporation is organized, capitalized, and/or operated. This happens quite rarely, and generally with corporations that are operated with indifference to their corporate nature and structure. Examples include cases where the owners have provided little or no capital, fail to observe corporate formalities such as adopting and following bylaws, or fail to notify outsiders that they are doing business with a corporation.

By the way, when you refer to yourself as "just an employee," it raises some doubt about whether you are high enough in the corporate organization to have actual or apparent authority to execute this contract. Often, employees ranking below vice president or general manager don't have requisite authority except for, perhaps, relatively minor contracts.

If you have doubts about potential personal liability, I'd advise discussing your reservations with your corporate or personal attorney (a) before signing this agreement, and (b) as a general precaution against potentially getting into trouble with future deals.

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Answered on 7/01/13, 1:44 pm

Anthony Roach Law Office of Anthony A. Roach

The general rule is that an employee who signs a contract on behalf of a corporation is not personally bound unless the agent signs something intending to be personally bound. In general, where the principal is disclosed, the principal is liable and not the agent. “Where the signature as agent and not as a principal appears on the face of the contract, the principal is liable and not the agent.” (Lippert v. Bailey (4th Dist. 1966) 241 Cal.App.2d 376, 382.) “Where an agent is duly constituted and names his principal and contracts in his name and does not exceed his authority, the principal is responsible and not the agent. This view has been adopted in California.” (Filippo Industries, Inc. v. Sun. Ins. Co. (2nd Dist. 1999) 74 Cal.App.4th 1429, 1442.)

From my personal experience, I can tell you that creditors tend to sue the person named who signed the contract, and sometimes both the principal and the agent. This can get to be a pain, especially in situations with vexatious creditors.

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Answered on 7/01/13, 2:24 pm
John Laurie Gertz and Laurie

an employee is generally not liable for acts taken on behalf of a company. However it depends upon what the document says. ie is there a personal guarantee?

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Answered on 7/03/13, 10:53 pm

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