Unauthorized Signature on Business Contracts

[cwear]

What is the name of your state (only U.S. law)? Arizona

Had a former employee sign her name to a contract and the owner has been auto paying on it for a year. She just realized that the former employee signed on the contract. She wants to know if we can void the contract since she did not give authorization for this employee to sign. Still a substantiation amount owed on this contract. As the new employee I just found this out (about the unauthorized signature). Owner told the contracting company that only she could sign on contracts, yet they let the employee sign for it. I have been trying to look up legal for this, but have been hitting a brick wall because of timelines. The contract was signed in 2015, and I am just now finding it in 2017. I called the company and told them that the employee did not have authorization to sign and reminded them that they were told that only the owner was a signing party, basically they told me to "sod off" and was not their problem. So what can be done? I have told the owner because of statute of limitations she really has to pay the balance, but she wants to fight the company for accepting an unauthorized signature. Any advice or help would be greatly appreciated.

Thank you in advance.

 

[STEPHAN]

What do you have to do with this?

 

[Mass_Shyster]

I have told the owner because of statute of limitations she really has to pay the balance

I suggest you stop giving legal advice, and tell your employer to have an attorney review the contract.

 

[latigo]

What is the name of your state (only U.S. law)? Arizona

Had a former employee sign her name to a contract and the owner has been auto paying on it for a year. She just realized that the former employee signed on the contract. She wants to know if we can void the contract since she did not give authorization for this employee to sign. Still a substantiation amount owed on this contract. As the new employee I just found this out (about the unauthorized signature). Owner told the contracting company that only she could sign on contracts, yet they let the employee sign for it. I have been trying to look up legal for this, but have been hitting a brick wall because of timelines. The contract was signed in 2015, and I am just now finding it in 2017. I called the company and told them that the employee did not have authorization to sign and reminded them that they were told that only the owner was a signing party, basically they told me to "sod off" and was not their problem. So what can be done? I have told the owner because of statute of limitations she really has to pay the balance, but she wants to fight the company for accepting an unauthorized signature. Any advice or help would be greatly appreciated.

Thank you in advance.

My goodness. Did you try to read the above disorganized rambling before you posted it? I know that it is not easy for some people to put down their thoughts in writing when not accustomed to it, but this is literally horrid. Its impossible to make any sense of it. What contracting company? What contract? What owner? Who is we? Who the hell is She"? Who is her? You've tossed out pronouns as if they were confetti.

Its no wonder you've hit a brick wall "looking up legal". (Which for several reasons you should not be doing.) Its a little difficult to do any research when you can't pin down the subject. If you want to be of help to whomever needs it, then don't try to help.

 

[adjusterjack]

I have told the owner because of statute of limitations she really has to pay the balance, but she wants to fight the company for accepting an unauthorized signature. Any advice or help would be greatly appreciated.

Have your employer read the following.

https://en.wikipedia.org/wiki/Apparent_authority

It will give her some idea of what she is up against.

Then she needs a lawyer.

 

[Taxing Matters]

What is the name of your state (only U.S. law)? Arizona

So what can be done? I have told the owner because of statute of limitations she really has to pay the balance, but she wants to fight the company for accepting an unauthorized signature. Any advice or help would be greatly appreciated.

Thank you in advance.

First, you should be careful about giving legal advice to your employer if you are not an attorney. That generally puts you in the area of the unauthorized practice of law. It is fine to give the employer general information on the law, but you ought to stop short of telling the employer what course of action to take.

That said, your employer has a problem. If the other party was expressly told by the owner before entering into the contract that only the owner could execute contracts, then it was clear to the other party that the employee did not have the authority to sign off on the contract. But that’s not the end of it. A party can ratify an act of an unauthorized agent after the fact and thus make the contract binding. Here, the owner paid on the contract for two years after the contract was signed by the employee. That makes for a very strong case of ratification. The other party certainly could take that to mean that the owner did in fact approve of the contract. After having paid for two years the owner is going to have a hard time saying now that the contract isn’t valid. That's especially true if the other party has already fully performed its part of the contract. The owner cannot stand by and get the benefit from the other party and then after getting that benefit decide not to pay based on an argument that the employee didn’t have the authority.

The owner should have had move oversight over what was going on. It’s very sloppy that this went on for two years and the owner was clueless that contract wasn’t authorized. If the owner was the only one who could approve contracts, the owner should have recognized right away that this wasn’t a contract the owner had approved.

Your employer should consult a contract attorney in your state for advice. It’s important to actually read the contract and know the full history of what happened to reach a good conclusion on what options might be available. But it is certainly possible the owner may be stuck with this contract now.

 

[LdiJ]

First, you should be careful about giving legal advice to your employer if you are not an attorney. That generally puts you in the area of the unauthorized practice of law. It is fine to give the employer general information on the law, but you ought to stop short of telling the employer what course of action to take.

That said, your employer has a problem. If the other party was expressly told by the owner before entering into the contract that only the owner could execute contracts, then it was clear to the other party that the employee did not have the authority to sign off on the contract. But that’s not the end of it. A party can ratify an act of an unauthorized agent after the fact and thus make the contract binding. Here, the owner paid on the contract for two years after the contract was signed by the employee. That makes for a very strong case of ratification. The other party certainly could take that to mean that the owner did in fact approve of the contract. After having paid for two years the owner is going to have a hard time saying now that the contract isn’t valid. That's especially true if the other party has already fully performed its part of the contract. The owner cannot stand by and get the benefit from the other party and then after getting that benefit decide not to pay based on an argument that the employee didn’t have the authority.

The owner should have had move oversight over what was going on. It’s very sloppy that this went on for two years and the owner was clueless that contract wasn’t authorized. If the owner was the only one who could approve contracts, the owner should have recognized right away that this wasn’t a contract the owner had approved.

Your employer should consult a contract attorney in your state for advice. It’s important to actually read the contract and know the full history of what happened to reach a good conclusion on what options might be available. But it is certainly possible the owner may be stuck with this contract now.

I will also add that your employer needs to consider the cost of the contract vs the cost of consulting an attorney about trying to end the contract. If we are talking about a contract for a postage meter, or water delivery or some other relatively minor expense its not going to be worth fighting over it.

 

[Taxing Matters]

I will also add that your employer needs to consider the cost of the contract vs the cost of consulting an attorney about trying to end the contract. If we are talking about a contract for a postage meter, or water delivery or some other relatively minor expense its not going to be worth fighting over it.

It's hard to know for sure of course, but as the OP did say that there is a “Still a [substantial] amount owed on this contract” I’m guessing it’s something significantly more costly than a postage meter or water delivery contract.

 

[LdiJ]

It's hard to know for sure of course, but as the OP did say that there is a “Still a [substantial] amount owed on this contract” I’m guessing it’s something significantly more costly than a postage meter or water delivery contract.

Could be, but this guy's definition of "substantial" could be different than ours.