Attorney Albert Chapar successfully defended a firm client in the State Court of Cobb County. The client was sued on an alleged contract but maintained that it was not the proper party. The case involved determining who was liable on a contract when the contract did not actually name an existing legal entity in the precise way the entity was shown on state records. The Chapar Firm was able to convince the Court that the contracting party was NOT the defendant in question.
The case provides caution and reminder. As a general matter, only parties to contracts are liable on them. However, if the contract does not name either a real person, or an entity that actually exists as an artificial entity like a corporation or limited liability company, there may exist some legal question of fact regarding whom the parties intended to be bound. Anyone signing a contract in a trade name, for example, runs the risk of being either personally liable or inviting a dispute regarding which of several entities may be the real contracting party.
Of particular concern to those who sign contracts on behalf of entities is the need to clearly identify the entity, and to designate by the signature the office of the signer. For example, the president of a corporation that signs a lease on behalf of the corporation generally should clearly designate the lessee as the corporation itself. The signer should also place the word “president” next to his or her own signature. The failure to do that may result in the contract being a personal liability of the individual signer. The attorneys at the Chapar Firm are prepared to assist you with these or any other issues that arise in connection with your business.