Hey it’s Shaunt of the Oozoonian Law Corporation here with article 8 of the contract drafting series to discuss the proper identification of parties in your contract and how the signature lines should be set.
Business entities and the maintenance of corporate formalities are critical to ensure that the limited liability afforded to corporations is actually applied to your corporation and to you. The introduction section of a contract should set the identification of the parties in a manner to clearly set out who the parties to the contract and which parties are to be bound by the terms and conditions of the contract.
Individuals should be identified with their legal first and legal last name. Of course, more detail can be provided such as using the full legal name, or adding nicknames the individual is sometimes referred to as. For example, “John Gomez” should be identified as “Richard (John) Gomez”.
Businesses, on the other hand, should be referenced by their full corporate name as registered with the California Secretary of State (or other State’s government agency authorizing the corporation’s right to conduct business). For example, “Oozoonian Law” should be identified as “Oozoonian Law Corporation”, since that is the full name of my corporation.
To illustrate the example clearly, it would be grossly inaccurate to identify my law firm as “Shaunt Oozoonian, doing business as Oozoonian Law Corporation”. The only time this phrasing is correct is if the business is a sole proprietorship (DBA or FBN). However, corporations (and limited liability companies) are legal entities separate and distinct from its owners; and therefore, should be listed as a party separate from you (the owner).
Now let’s move to the signature line. The signature line must match the identification of the parties in the introduction section. If an individual is a party to a contract, the signature line should include their full legal name, as used in the introduction section, a line for their signature and the signature should be dated.
As an example:
________________
Richard (John) Gomez
Date:
On the other hand, a corporation (or a limited liability company) can only act through its authorized members, managers, shareholders, directors and/or officers, or any other person authorized to bind the company. The full legal name of the corporation must still be listed, along with lines for the signature of an authorized agent, and identification of the authorized agent’s role within the company. Of course, the signature should also be dated.
As an example:
________________
Name:
Title:
Oozoonian Law Corporation
Date:
Sometimes, a company requires more than one person to execute the contract in order for it to be binding against the company. It’s generally good practice to make sure the person who is about to sign your contract on behalf of the company you are contracting with has authority from the company to sign on behalf of the company. If the company’s agent doesn’t have authority to bind the company, it’s possible that their signature won’t count to hold the contract enforceable against the company.
Thanks for reading.
Shaunt Oozoonian, Esq.
Oozoonian Law Corporation
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