- Hey there.
Welcome back to All Up in Yo' Business.
I'm business and branding attorney, Aiden Durham,
with 180 Law Co in Colorado.
And today, we're gonna talk about how you sign
on behalf of your LLC or corporation.
(gentle music)
I'm not just gonna tell you how to sign, because of course,
my job here is to educate you guys,
not just tell you the whats and the hows,
but make sure you understand the whys as well.
So I'm gonna tell you who can sign
on behalf of your company and why it matters
that we sign in a particular format.
I'm also gonna tell you what to do if you did it wrong.
Accidentally signed something incorrectly,
how you might be able to rectify or fix that situation.
But first, if this is your first time on my channel,
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All right, I'm gonna skip to the good part,
what I know most of you are here for, the how,
the how to sign.
What should our signature look like
if we're signing on behalf of our LLC or our corporation?
As I'm going to explain later on,
the importance is that we are signing
on behalf of the company.
It needs to be clear in our signature
that we are not signing ourselves,
we are signing in our capacity,
whatever capacity that is, for the company.
And so what that would typically look like
if we're looking at a contract, any kind of contract really,
the signature block at the bottom,
we'll typically want to say something like company name,
our signature, by, and then our name and our title.
So if I was going to be signing on behalf of my company,
my signature line would say something like 180 Law Co, LLC,
my signature, by Aiden Durham, member,
'cause that's my position, my title with my company.
I have other titles, you know, managing attorney,
that kind of thing.
But in my formal capacity, I am the member.
Same idea applies if your business
is operating under a DBA or a trade name.
It is still the business that's signing, the actual entity,
not the DBA or the trade name.
And so in that instance,
we would typically put the LLC or corporation name,
DBA, doing business as, then the DBA or the trade name.
And then same thing, signature, name, title.
All right, now let's rewind a little bit,
talk about why it matters.
Why does it matter that we are not signing a contract
just with our own name?
Well, because if we sign a contract with our own name,
then we, as the individual, are signing that contract
and we are agreeing to whatever obligations
or responsibilities come with it.
For all intents and purposes, an LLC or a corporation,
or any other kind of legal entity is a separate person.
It's a separate living person in the eyes of the law,
except you know, it's not actually a person,
so it can't actually sign anything on its own.
So there has to be a person
or people who can sign on its behalf.
It's akin to if I were to sign my name
on a contract intended for you,
or intended for some other person.
Why would I sign my own name
if the contract's not actually with me, it's with you?
This contract is not actually with you
and a third party,
it's with the company and the third party.
And so if it's not clear on the contract
that this is a contract between my LLC
and this third party, then that doesn't exist.
It's a contract between whoever is named
and signing the agreement.
It's also important to make sure
that anywhere else in this contract or in this agreement,
your name isn't mentioned,
unless you are actually going
to personally undertake some obligations,
maybe a personal guarantee or something like that.
Except in some minor cases like that,
your name as an individual really shouldn't be anywhere
on that contract, except for in the signature line.
Typically in a contract,
we'll see an opening paragraph
that says this is an agreement between such and such party
and this other party.
Those parties, that party, in your case,
needs to be your company name.
180 Law Co, LLC, your LLC,
or your corporation name, and again,
if you're operating under a DBA or a trade name,
it should read company, actual legal company name, DBA,
the DBA or the trade name.
How far does this rule extend?
Do we have to sign literally everything in that format?
Yeah, for the most part,
not every single instance of course.
If we're writing a note,
a memo or something to a colleague, or even a client,
that's not a legally binding agreement in most instances.
And so if you just say sincerely Aiden
at the end of your emails, that's fine.
Of course, not Aiden,
unless your name is Aiden.
Checks, business checks.
This question often comes up.
You don't have to necessarily write the entire company name
above your signature line.
As long as the checks have the company name on the checks,
which they should if they're coming from a company account,
that's clear that this is a check from the business
and you are signing on behalf of the business.
But generally speaking, any kind of contract,
any kind of legally binding agreement
that is supposed to be with your company needs to be signed
in that format, or some similar format to that,
in order for it to actually be legally binding
on the company and not you as an individual.
Now, it doesn't have to,
it doesn't have to look exactly like that.
You know, you can write just your signature,
and under the signature line, you can say,
on behalf of company name, you know, by your name and title.
The important thing is that the company name exists
and it is clear that you, in your capacity as member,
manager, president, CEO,
you are signing in your capacity on behalf of the company.
Now, let's talk about members,
managers, CEOs, presidents.
Who?
Who can actually sign on behalf of an LLC or a corporation.
Well, of course it depends.
It depends on how the company is organized.
If you've set up an LLC as a member managed LLC,
then typically, in most instances,
the members are agents of the company
and they can bind the company,
make legally binding obligations for the company.
They are authorized, typically just by default, by law,
to sign on behalf of the LLC.
But if your LLC is set up as a manager managed LLC,
then only the appointed managers have that authority,
regardless of whether they are members or not.
In a manager managed LLC,
the managers are agents and can act on behalf of the LLC
and sign legally binding contracts
and engage in other obligations for the LLC.
Sometimes a operating agreement might permit us
to have officers like a CEO or a president.
If it does, and if the operating agreement
or state statute say that those officers also
have that authority to bind the company,
then those individuals can do so as well.
But that part is typically going to be dependent
upon your LLC's operating agreement and, to an extent,
the applicable state statutes.
In a corporation,
it's the officers of the corporation
who are typically going to be in that position
to act or sign on behalf of the corporation,
not the shareholders in most instances,
unless of course the bylaws say that they can,
but typically it's the officers.
So CEO, president, or a particular officer.
Again, a lot of these rules,
these kind of authorizations of who can act on behalf
of the company can be specified or modified
in the formation documents like the operating agreement,
the bylaws, or some kind of a resolution.
The important part is making sure whoever is signing
on behalf of the company actually has authorization
to do so.
And now, okay, we've learned that.
Now that we know, what if, ooh what if I did it wrong?
Maybe, you know, you just started a business,
you're new to this,
maybe you didn't know
that you shouldn't be signing contracts
just with your own name and no mention of the company.
Is there a way to fix that?
Maybe, sometimes, not always.
Of course, it is going to depend on the terms
of the contract.
Often, a contract will address assignment.
There's usually a clause,
typically towards the end, having to do with assignment.
Can a party assign their rights
or obligations under this contract to another party?
If it permits you to assign your rights or obligations,
then you could assign that contract to your LLC
or your corporation.
You could also simply ask the other party
if they're willing to amend or change the contract.
Again, this is often addressed in the contract itself.
Typically, towards the end,
there will be a clause titled something like amendments,
and usually it says this contract can't be amended
unless in writing signed by both parties.
And so if the other party agrees to it
and they're okay with it,
we can sign an amendment, saying, you know,
pretty much anywhere where my name is mentioned,
we're replacing the LLC or the corporation name there.
Or you could say, hey,
let's terminate this existing contract
and then write up a new one, same terms and everything,
except this new one is gonna be under the LLC name
rather than mine.
Again, depends on if the other party is down for it,
but that's another way around it as well.
If none of that's an option,
then often we're gonna just have to wait it out,
wait until this contract terminates, or expires,
or we have the opportunity to terminate it ourselves,
and then we can renew or write up a new contract
that names the LLC or the company as it properly should.
And that's really all there is to it, folks.
If you learned a thing or two,
go ahead and click that thumbs up button.
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Thank you all so much for watching.
I'm Aiden Durham and I'll see you next time.
(gentle music)