Be careful how you sign that!

Oftentimes, clients or potential clients bring me a contract or other document after they have signed it. Sometimes, by then, it is too late for me to help the client get out of a jam. I was recently shown a document where a client signed a contract, believing his signature to be on behalf of his corporation, that was signed individually by the client. That is, the client thought he was obligating his company under a contract, but did not sign the document properly and thus, obligated himself personally. As a result, all of the benefits of the typical corporate liability shield are now gone.

How should someone go about signing a contract on behalf of their corporation? Like this:

ABC Widgets, Inc.
(signature)
by: (typed or printed name of person signing above)
its: (officer position of person signing)

Now, the world is on notice that a corporation is on the hook and not the person, individually, who signed the contract. This is part of the "corporate formalities" that are required to take advantage of the corporate liability shield. By signing as suggested, it is clear to the other party and outside third parties that a corporation is on the hook - not the signer. Anytime that all of the elements of a corporate signature are missing (ie. corporation name, signed by officer, position of officer), it is possible that an opposing party could go after the personal assets of the signer - not good!

Similarly, if you wish to obligate another party, make sure you are clear who the other party is. Is it a corporation? an individual? a partnership? The type of entity will make a major difference when it comes time to seek a remedy for breach, but that's another story.