QUESTION

Can someone add my business to a contract and sign for me without my knowledge?

Asked on Aug 24th, 2015 on Breach of Contract - California
More details to this question:
I am a general contractor and a designer that I would work with added by business to a contract with a customer. The designer signed it and I had no knowledge of this contract. The designer has no ownership or signing rights for my company.
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1 ANSWER

Appellate Practice Attorney serving New York, NY
It is possible that the contract will be binding on your company (which I will assume is a separate legal entity, like a corporation or llc) with regard to the customer, depending on whether the designer  had what is known as "apparent authority", but the designer would be liable to your company for any damages it suffers from having these obligations imposed on it.  Apparent authority basically means when a principal (your company) puts an agent (the designer) in a position where a third party (the customer) would reasonably believe that the agent had authority to act for the principal.  For example, if you leave a friend alone at the cash register of your store to handle sales transactions, a customer would reasonably assume that your friend had authority to give discounts, like 10% off if you buy three.  In that case, you would have to honor the deal your friend made, but could sue your friend for the 10%.  It would not be reasonable for the customer to assume that the friend could sell a car for $50, however, and you would be able to recover from the customer and/or your friend if that happened.  Here, I would want to know a lot more facts before I could even guess at whether there was apparent authority or not. Also, if your company doesn't want to be bound by the contract, it has to speak up quickly.  If the company goes along with the contract for a while, or even stays silent knowing that the designer had no authority, it will have ratified the contract and be bound by it.
Answered on Aug 25th, 2015 at 8:02 AM

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