Before a contract is signed, what must be checked to make sure the people signing it have the right power to make their company keep its promises?

Before a contract is signed, it is crucial to verify that the individual signing it possesses the legitimate power, known as authority, to legally bind their company to the agreement. Without proper authority, the contract may not be enforceable against the company, meaning the company might not be obligated to keep its promises. This verification process ensures legal enforceability and protects all parties involved. A company is a separate legal entity, distinct from the people who work for it, so its actions are carried out by individuals who must be empowered to act on its behalf. There are primarily two main types of authority to consider: actual authority and apparent authority. Actual Authority is the authority the company has genuinely given to its representative. It can be: 1. Express Actual Authority: This is explicitly granted, either verbally or in writing. Examples include a formal board resolution specifically authorizing an individual to sign a particular contract, a power of attorney document granting specific signing rights, or a job description that clearly states the employee has the power to enter into certain types of contracts on behalf of the company. 2. Implied Actual Authority: This is authority that is not explicitly stated but is reasonably necessary to carry out express authority, or is customary for someone in a particular position. For instance, if a company's sales director is expressly authorized to negotiate and finalize sales contracts, they would have implied actual authority to sign standard order forms or other related documents necessary to complete the sale, even if not explicitly told to do so. Apparent Authority (or Ostensibl....