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November 21, 2017

Are You Signing Your Contracts Correctly?

Are You Signing Your Contracts Correctly?

Signing your contract seems like a no-brainer. You just plop your signature on the line, right? Well, that may be true...but there are a few things you should consider before typing or signing your name on a client contract! 

If you’re entering into a contract with a client, then you’re signing as your company.

This doesn’t mean you’re actually signing your company’s name. (More on that in the example below.) 

Someone who can sign documents on behalf of your company signs their name, and indicates their  position  within the company. And generally, someone who has the power to sign contracts has the authority to make decisions by themselves without the input of others, like an owner of a company. 

How can this go wrong? For example, if an administrative assistant signed a client contract, the contract may be considered void and therefore worthless. That person didn’t have the authority to enter into a contract on the company’s behalf.

If you’ve married and changed your name, then you’re signing as your legal name.

Say you legally changed your name after tying the knot. When signing a contract, you should use your new name,  even ifthe name of your company is different. You should also use your new name if  all your original company paperwork still has your maiden name. 

Haven’t legally changed your name yet? Use your maiden name when signing your contracts.

Here are some examples to illustrate what we mean:

correct and incorrect ways to sign contract as individual or as name of business

In the correct contract on top, “Ross Gellar” is the co-owner and signed his name to represent Ross and Rachel Photography. It’s  not correct  that, in the contract on the bottom, he used his company name to sign. That’s an incorrect signature.

As for Mrs. Kim Kardashian West, she used her newly changed married name to sign the contract in the correct example. The incorrect example shows her using her old maiden name.

Make sure your company is properly named and title is properly listed on the contract.

Your company name and your title are two things that help clarify exactly who and how you are entering the agreement. It also shows that your company is entering into the agreement, rather than you entering the contract on a personal level. 

By signing the agreement as the owner of your company, rather than just your name, you help limit your personal liability,  since it’s your company entering into the contract and not you  personally. So, if a problem arises, someone can come after your business assets like business funds or trademarks…but typicallynotyour personal assets like your car or house.

Here’s an example to show you how your company name and title should be shown on the contract.

 

correct and incorrect ways to sign contract as individual or as name of business

Even if you don’t havean LLC or C-Corp, you can still sign as your company. You can see how “Mickey Mouse” would sign a contract if he didn’t have an LLC below.

correct and incorrect ways to sign contract as individual or as name of business

 

Sign your contracts properly to make them valid

Did you think about these three things when signing your client contracts? They’re small details, but they make a big difference! Now you know what to check for the next time you sign a new contract.

Are you missing anything else in your client contracts? Our  Client Contract Checklist can ensure that you’re dotting your I’s and crossing your T’s. Get your  Client Contract Checklist now so that you’re even more confident starting your new project or partnership!

client contract checklist

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