What to do if a roofing salesmen conned our trustee into signing a “Proposal” but the Trustee told the salesmen 3 times that he didn’t have authority to commit the church to anything?

The salesmen told the trustee that he needed to sign a paper “Allowing us to contact your insurance company”. The salesmen did not tell trustee that if church does not give them the job, that the church was committed to paying roofing company 35% of insurance payment. They deceived our trustee. We believe it to be unethical. What can we do about getting out of this?

Asked on January 31, 2013 under Business Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

First, your church can only be held to the terms of the document that a representative of your chuch signed, so if the signed document does not commit you to paying this company, you would not seem to be required to.

If the document does commit your church to paying, then--except as below--you would seem to be obligated to pay. That is because if a document states what your responsibilities or obligations are, and a representative of your organization signed it, it is generally enforceable against the organization. People are presumed to read, understand, and agree to what they signed, so if the trustee signed anything which by its terms commits your church to paying 33%, then you were not legally "conned" or defrauded--rather, the trust made a potentially costly error, but the law does not protect people or entities from their errors.

Third, normally, even if the trustee did not have the authority to bind your church, you'd still most likely be bound, since an entity can be bound by a person who, to a reasonable outsider, would normally or logically seem to have authority: this is called "apparent authority." A trustee would reasonably seem to have the requisite authority, especially if he did sign the document (since people without authority would not normally sign).

However, the above said, IF the salesman had actual knowledge that the trustee lacked authority--such as because the trustee, as you write, told the salesman repeatedly that he lacked authority--then the agreement would not be enforceable; "apparent authority" is defeated by knowledge of  the limits of a person's actual authority. However, this may be difficult to prove if there is nothing in writing (e.g. an email or text message  predating the signing) which can be used to prove the trustee told the salesman about his lack of authority; without some documentation, if the roofing company sues for their money, it may come down to credibility, but unfortunately, the circumstances (e.g. that the trustee held the position of trustee; that he signed) would normally tend to suggest that the salesman reasonably believed the trustee had the necessary authority.

In sum: you can try to escape liability if the document does not itself state that your churc is required to pay, and have a reasonable or even good chance of doing so; you can also try to escape liability on  the grounds your trustee  made the salesman aware of the limits of his authority, but this will be  much more difficult without documentation of that fact.


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