What is the potential liability of a salesperson signing a contract for the customer?

UPDATED: Oct 1, 2022

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What is the potential liability of a salesperson signing a contract for the customer?

I am a social media manager and IT for a remodeling company. My boss, the CEO, wants me to give our contracts to our sales team. I am worried about the liability of a sales guy signing a contract for the customer. The issue I have is they are an LLC the sales guy and we are a sole proprietorship. If we allow them to do the contracts what are the legal implications for us? How can we avoid being liable if someone were to claim the sales guy promised them something they didn’t receive? We have a contract in place that has pricing already but I want to play it safe.

Asked on November 5, 2018 under Business Law, California


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

If the salesman signs without the customer's consent, the contract would not be valid or enforceable against them.
If the customer incurred any costs or liabilities due to the salesman signing the contract, the customer could sue both the salesman and your company (which, if it is a sole proprietorship, means the owner personally) for such losses or costs.
A salesman signing without consent is commiting a crime--e.g. fraud or identity theft--and could face prosecution.
The way to protect yourselves is to not let the salesman sign contracts for customers.

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