Check the signature block before you sign that contract!

When signing a contract on behalf of a client (as an agent) or on behalf of your business or an employer, it is important to check that the signature block at the bottom of the contract specifies that you are signing the contract in this capacity (e.g., Joe Blogs acting as a director on behalf of X Ltd). If it does not, the recent Court of Appeal decision in Gregor Fisken Ltd v Bernard Carl [2021] EWCA Civ 792 indicates that you personally could be found to be a party to the contract. Obviously, this could be undesirable as it is the parties to the contract that are liable for its breaches.

Background

The case concerned a contract for the sale of a classic Ferrari whose gearbox had become separated.  The parties got into a dispute over the shipping of the gearbox.  One of the issues the court had to consider was whether the claimant (a limited company) was a party to the contract, where it had been identified at the heading of the contract as ‘agent for an undisclosed principal,’ but had signed the contract in a signature block which did not indicate it was signing as an agent (the signature block just stated the limited company’s name).

The Decision

The Court of Appeal found that the Claimant was a party to the contract even though it had been referred to at the beginning of the contract as an ‘agent.’

In reaching this decision, the Court of Appeal considered earlier case-law and found that there was a principle under English law that where a person signs a contract with no qualification, as to the capacity in which it signs, it will be a party to the contract unless the contract makes it clear that it did not intend to bind itself personally.  The Court of Appeal also stated that the mere description of the company as an agent at the heading of the contract was not sufficient to outweigh this principle.

Comment

The key take-home point from this decision is to ensure before signing a contract that the names of the parties in the signature blocks are the parties intended to be bound by the contract.  Further, if you are signing a contract on behalf of a company or principal, make sure this is clearly stated in the signature box.

Written by Ramsay Monime, Partner