united-states contract-law california corporate-law
Signature authority for corporations?
<p>Let's say I'm a disgruntled McDonald's employee. One day I walk up to someone and give them a piece of paper saying "McDonald's agrees to give you ONE MILLYUN DOLLARS in exchange for your pocket change. Signed, me, on behalf of McDonald's."</p>

<p>Now, I really doubt that this contract could be enforced against McDonald's in court. Presumably their articles of incorporation specifically set a list of people with the authority to enter into contracts like this, and presumably that list included only high-level directors and such. Yet clearly other people in the organisation have some authority to enter into contracts, for purposes ranging from signing payroll checks to buying supplies. </p>

<p>So how is all this regulated? What determines what agreements a given employee can enter into on behalf of their company, particularly if there aren't any specific provisions in that person's employment contract?</p>

<p>In Australia a person must have ostensible authority as an agent (agency by estoppel) to bind their corporation. </p>

<p>If a person claims the authority and a reasonable person would believe in the circumstances that they have the authority then their actions bind the company. See <a href="http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s769b.html" rel="nofollow">http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s769b.html</a> for the law and <a href="http://www.mondaq.com/australia/x/386390/Contract+Law/Companies+and+perils+of+ostensible+authority+the+danger+of+paying+money+to+a+third+party+and+not+to+the+creditor" rel="nofollow">http://www.mondaq.com/australia/x/386390/Contract+Law/Companies+and+perils+of+ostensible+authority+the+danger+of+paying+money+to+a+third+party+and+not+to+the+creditor</a> for a case.</p>

<p>To take your example (and putting aside the fact that the purported contract is probably unenforceable in itself), if a reasonable person would conclude you had the authority (in your capacity as director or senior executive) then it would bind McDonalds; if you were a store manager or burger flipper, it wouldn't. </p>
