They may own all of the shares but they are never anything other than j.smith (or whatever) so at best all that they can do is sign a company document as j.smith for and on behalf of ABC ltd.
Think of the company as a one year old child and the director the childs father.
The father has a duty of care over the child and can sign documents on behalf of the child but they cannot sign a document as the child.
That same fiduciary duty of care extends to a limited company.
Worst case scenario here is that your client has some non legally binding contracts.
note that it should really be a solicitor that answers this question.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I look after the legal paperwork for a couple of residents management companies in the village I live. Every piece of correspondence is signed "name of firm".
Evertime I deal with a sale/purchase I get new covenants issued with a "registered address" for the companies listed on the paperwork, that no longer even exist and although the registered has obviously changed, because the original covenant issued over 15 years ago it, which the new covents replaces refers to this address, they insist on using it. It causes problems because they sometime will post the paperwork to it - and the address is now a 178 housing estate!
I was told by a good solicitor friend of mine, unless something legal actually becomes a problem - don't worry about it, leave it alone!
-- Edited by YLB-HO on Friday 15th of February 2013 10:11:37 AM
I think that your solicitors advice is sound Frauke.
I try to ensure that clients do things as they should as I'm a bit of a stickler for crossing t's and dotting i's but I don't tell them that if they don't do as I say it will make absolutely no difference to them.
If a bank accepts a cheque written with Mickey Mouse ltd. as a signature then such is an acceptable form of signing (which of course must have been pre agreed with the bank as a form of signature of the director, not actually as the signature of the company which does not have one).
The principle of the matter though does remain in that a company cannot sign anything but must defer signing to a representative who signs on behalf of the company but not as it.
In the case of contracts the contract itself may be invalid due to the way that it is signed... But... If both parties to the contract act as though the contract were valid then such will make it so (I think that Brogden vs Metropolitan railways (1877) (#1) was the case law for that but don't quote me on that one and I may change the case when I'm back in my home office amongst my books).
Contract basically can be created by a pattern of past practice regardless as to the validity of the actual contract.
kind regards,
Shaun.
#1 Paper F4 was definitely my favorite of the ACCA papers... Cursing now that all those years ago I took a job offer over the offered place at a good Uni to study law. If only we got the chance to go back and do it all over again eh? Wonder if I'll wake up in a minute and find that I'm actually still 17 and this was all a dream!
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
