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Example from https://www.lawinsider.com/clause/authority-to-sign

Authority to Sign. Each of the persons signing below on behalf of any party hereby represents and warrants that s/he or it is signing with full and complete authority to bind the party on whose behalf of whom s/he or it is signing, to each and every term of this Agreement.

I once heard the point is that if the person signing doesn't have the authority to bind the company, then you can sue them instead of suing the company, which is presumably easier. Is this correct?

Wouldn't such a clause be desirable in any contract where someone is signing on behalf of a company?

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you can sue them instead of suing the company, which is presumably easier. Is this correct?

The party to the contract has one or more viable claims against the unauthorized signer, but that does not necessarily imply that the company is exempt from liability.

If the company benefited from the contract, the company might be liable in a claim of unjust enrichment. Likewise, the company's conduct could evidence an implied contract that materially resembles the one that the impersonator signed, thereby rendering the lack of signer's authorization moot. In both types of scenarios the affected party may sue both the impersonator and the company.

Notwithstanding the principle against double recovery, in some jurisdictions the injured party's award could exceed his losses. That is because the law in those jurisdictions entitles a defrauded person to treble damages. Only the impersonator is liable for fraud, although the chances impersonator's insolvency, de facto immunity, disappearance, etc., suggest that it is in the plaintiff's best interest to sue both impersonator and company if a scenario outlined in the preceding paragraph applies.

Wouldn't such a clause be desirable in any contract where someone is signing on behalf of a company?

Yes, although a clause of that sort is unnecessary because the conduct could be actionable under one or multiple legal theories such as fraud, tortious interference with relation, or unjust enrichment, or by statute. Furthermore, the circumstances might warrant a finding of an implicit contract to which the company is a party, thereby defeating the allegation that the company did not actually enter the written contract.

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  • Didn’t downvote, but the point of the “is this correct”, was “does it allow suing the impersonator”, not “is it easier to sue the impersonator”. So your first bullet point is irrelevant. Not sure where you are going with your second bullet point, and the third likewise doesn’t seem consistent with the point of “does it allow..”
    – jmoreno
    Apr 22, 2023 at 17:27
  • @jmoreno Thanks for your thoughtful criticism, which made me realize that some of my focus was misplaced. I edited accordingly. As for the former third bullet point, suing both the impersonator and the company is lawful and, under some scenarios, more pertinent. Apr 22, 2023 at 23:31

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