What is a company’s liability regarding an unauthorized signature on written agreement?

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What is a company’s liability regarding an unauthorized signature on written agreement?

An assistant manager signed an advertising agreement with an outside vendor for 2 years payments; 1 year in advance and the 2nd automatically. The information is posted as she documented on a website. This came to light because an invoice was received requesting payment. There is no written policy documenting if she did or didn’t have authority. The agreement was signed on 1/19/11. We do not want to advertise with this company and obviously do not want to pay. What are our options?

Asked on March 29, 2011 under Business Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

Unfortunately for you, if it would be reasonable for an outside party--such as this vendor--to believe that this employee would have the authority to conclude the deal that she did, then the outside party can most likely enforce the contract. Only if it would be unreasonable for the vendor to have thought that this employee could to sign this contract would you have a good chance of terminating or voiding it.

You may be best off taking a negotiating approach--could you maybe get the vendor to accept partial payment but they don't advertise? i.e. they get something without doing any work or having any obligation, you avoid paying the full amount and advertising where you do not want to?


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