1

When it comes to corporations, who has the authority to bind a company and what evidence should they provide to prove this please? I assume company officers do have the power, but how can this be validated for sure? I am using the state register database, but it only has the registered agent. They also want credit card information for this! I ask for a contract with an employer, which are requested modifications to. The company says the project manger will sign. I requested for the signature from the registered agent. The point is how can I trust a verbal confirmation that x or y has the authority to make modifications to the company policy?

2

Anyone with ostensible authority can bind the company. That is, authority that appears from the circumstances to exist whatever the reality may be.

The person’s role and the nature of the transaction feed into the circumstances. For example, consider a national supermarket chain:

  • The cashier has ostensible authority to sell the supermarket’s goods.
  • The manager has ostensible authority to resolve customer complaints.
  • The purchasing officer has ostensible authority to enter into contracts with suppliers.
  • The state manager has ostensible authority to buy and sell land.
  • The officers (CEO/Board) has ostensible authority to do anything.

Anyone who enters into a transaction with a person who has ostensible authority can rely on that to bind the company. Of course, ostensible authority ends if a reasonable person would believe (or actually knows) that the person was exceeding their actual authority, for example, if the supermarket cashier sold you the supermarket, the company wouldn’t be bound.

If the person acts as if they have authority and it’s reasonable to assume they do, then they do.

  • This makes a lot of sense, but as the gaps get tighter, things get blurry. Ex. Can cashier manually enter a price with 10% discount? Would you be liable if the security stopped you for colluding with the cashier? I'll update my exact question above. – Sean Mar 30 '18 at 22:58
  • 1
    Ostensibly they can give you 10% off. That they don't have actual authority isn't your problem unless there's some good reason you should have know they couldn't do it. The security officer has no cause to stop you. The store can use all manner of means to track you down, but they would have to file complaints and convince a prosecutor that charges of theft or fraud or whatever else is appropriate. – Nij Mar 31 '18 at 2:28
  • On the eastern side of the Pacific we call that "apparent authority" but it means exactly the same thing. – ohwilleke Mar 31 '18 at 17:57
  • Also, if someone acts outside their actual authority within the company as determined by employment agreements and company resolutions and bylaws, they can be sued for binding the company to something that they didn't have the authority to do. And, the apparent authority rule is applied more strictly in the case of governmental entities than private ones. – ohwilleke Mar 31 '18 at 17:59
  • I think the cashier will have the ostensible right to give 10% off to a customer in the right situation, but no ostensible right to giv 90% off to their friends and family. – gnasher729 Apr 2 '18 at 12:58

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.