Contract

[FROSTY]

Hi chaps, I wanted to run something past you. If a contract isn't signed by a Director or secretary of the company is the contact legally binding. Does it fall under the 2006 companies act. Formalities of doing business. It states that a director must sign the agreement.
I'm new into the business and reviewing contracts. There is one contact I would
Like to get out of and notice that is was signed by an individual who has no authority to sign it on before of the company and who has also left the business many years ago.

[wales01man]

Re: Contract

may be important when was contract signed?

[des8]

Re: Contract

Legally, to bind a company to a contract, it must be signed by a person who has the authority to do so.
However.........
Would you care to give more details?

[EXC]

Re: Contract

may be important when was contract signed?

Indeed if it was many years ago it may difficult to argue that a contractual relationship doesn't/shouldn't exist.

[charitynjw]

Re: Contract

IMHO

Where it can be demonstrated that there was/is an intention to create legal relations, especially given the passage of time, I doubt whether, in this case, a technicality would be sufficient to end the contract.
Usually, the test is an objective one; would a reasonable person perceive that the contract has been agreed to on the terms which the parties believe to be governing the agreement.
Smith v Hughes (1871)

[des8]

Re: Contract

Although the DOCUMENT has to be executed properly to be valid, the CONTRACT can be valid and binding without being signed.
Under common law all that is required are offer, acceptance, consideration and intention to create a contract.

Hence the "HOWEVER" in my first post! We need to know more.

[FROSTY]

Re: Contract

Hi and thank you. So the initial contract was executed in 2010 for a period of 36 months. I have reviewed the document and the individual that's signed it probably wasn't authorised by the company at the time to sign it anyway oh and has left the business 5 years ago. The contract is now a rolling 12 month. If you need further detail let me know. Also the contact is based on a assumption that we will incur expense of over 30k (telecoms call charges)

[des8]

Re: Contract

I would suggest that a contract that has been running for 5 or 6 years, both sides performing their part, would not be voided 'cos the janitor rather than an authorised person signed the document.
I think you'll have to find another way out!

[charitynjw]

Re: Contract

Hi and thank you. So the initial contract was executed in 2010 for a period of 36 months. I have reviewed the document and the individual that's signed it probably wasn't authorised by the company at the time to sign it anyway oh and has left the business 5 years ago. The contract is now a rolling 12 month. If you need further detail let me know. Also the contact is based on a assumption that we will incur expense of over 30k (telecoms call charges)

Do you not have an option to cancel the contract within each 12-month period?

[R0b]

Re: Contract

If the person signing the agreement who was not authorised acts as if he was authorised and the other side was not aware that the person was not authorised then it would be accepted that the person had authority to sign the agreement. The rolling 12 month period sounds like an automatic renewal clause so that after the initial period of 3 years, the agreement will automatically renew for a further 12 months unless sufficient notice is given prior to the expiry of the year. IF sufficient notice is not given then it will renew for a further 12 months at which point the agreement will end. Standard clause is that the notice period is something like 30/60/90 days prior to expiry of the 12 month renewal.

As suggested, your stuck but you could give notice now to indicate termination after the end of the 12 month period.

[FROSTY]

Re: Contract

Thanks again. If we terminated early and have to pay any early fee can they charge for variable cost. There is nothing in the contract that says you agree to pay X each year.

[charitynjw]

Re: Contract

Thanks again. If we terminated early and have to pay any early fee can they charge for variable cost. There is nothing in the contract that says you agree to pay X each year.

Hi FROSTY

Are you saying that they've agreed to provide a service, but nowhere in the contract does it state a fee for the service?