How to Properly Sign a Contract


HOW you sign a contract, and of equal importance, how the other party signs a contract, may seem as trivial as typing a name or signing a signature…but it is not! There could be significant consequences if not done properly. Although there is no ‘one right way’ to sign a contract, there are right ways and wrong ways. You do not want to sign it a wrong way and find yourself personally liable for paying a huge court judgement against your company, or at best an expensive court battle.

You also do not want the wrong person representing the other party to sign the contract. If it is not signed by someone with the authority to do so, you may not have a legally binding contract with that company, or you might be limiting your ability to enforce the contract if something goes wrong down the road. If you unsure, check with someone very senior in the company, or ask the government ‘Registrar’ in your province or state to verify their authority.

A quick note about ‘sole proprietors’:  If you are a sole proprietor (that is, you have not filed the appropriate documents with the government as per the legislation in your province or state and been granted the official papers to allow you to operate as a corporation or limited liability entity), even if you are doing business under a company name that is registered with the government, you are still personally liable for any claim against your company. Simply writing “DBA” (doing business as) or “O/A” (operating as) followed by your company name, still does not relieve you of personal liability for any claim against your company; you will always personally have to pay any debt owing by your company if your company cannot. The only way to avoid personal liability as a single person operating a company is to officially ‘incorporate’ your company. To incorporate a company, you must register it as a corporation and file the required documents for doing so.

I will cover the various options for business structures and the liability implications in more detail in a future post.

It is important to note that although the signature block examples I provide below are valid in most, if not all, jurisdictions in Canada and the U.S., the types of business entities and the protections they provide may differ to some degree depending on the province or state in which they’re registered. The information here deals with Ontario law. It also is important to note that there are exceptions to most rules; which is why you should consult a lawyer to address your specific circumstances.

 

Sole Proprietor Example

If you are running your company under your own name, print your legal name (the name on your birth certificate or passport), and sign and date it. If you are running your company under its own name, you can sign it as shown below.


Smith Running Shoes [Name of company as registered with the government]

By: ____________________  [Signature]
            Joseph Smith

Date: __________________

 

Limited Liability Partnership Example

The Smith Jensen Partnership LLP  [Exact name of business as registered with the government]
An Ontario partnership

By: ____________________  [Signature]
            Joseph Smith
            General Partner  [Must be signed by a ‘general partner’ to bind the business]

 Date: __________________

 

Corporation Example

Runners Fuel, Inc.  [Exact name of company as it appears in the Articles of Incorporation]
An Ontario corporation

By: ____________________  [Signature]
      Joseph Smith, President
      Authorized agent  [Person must actually have the authority to sign a contract for the company]

Date: __________________




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