Are your contract formalities in order?
Is the correct entity name used in the contract?
One of the most common mistakes parties make is not using the correct entity name or otherwise not entering into a contract with the correct party. Usually, the mistake is minor, such as inserting (or omitting) a comma before the “LLC” or “Inc.” However, occasionally the error is more serious.
Is the signature block appropriate?
Depending on the type of entity (partnership, LLC, corporation, etc.), there are commonly accepted signature block formats that should be used. The primary purpose behind an accepted signature block is to clearly set out the chain of legal authority that permits an individual to sign on behalf of a contracting entity. When accepted formats are not used, there can be confusion—or worse, disputes—about which individual or entity entered
into the contract and the authority of the individual signing the contract.
Has the right person signed the contract?
Even if a legal document has been signed by both parties, there can be questions about signing authority and whether the person has sufficient authority to bind an entity on whose behalf the person is signing. Generally, if a document is signed by the president of a corporation or the manager of a limited liability company, there is at least apparent authority to sign and bind the entity, although for a significant transaction you may want to confirm that authority. On the other hand, a person signing as an authorized signer or in a lower-level or undefined capacity may or may not have been granted authority to sign. If there is any question about the authority of the individual signing the contract, you can request that the other party provide documents establishing the signer has power of attorney or has otherwise been delegated the legal authority to execute documents and bind the contracting party.
Are there any missing exhibits?
Contracts frequently include one or more exhibits. Often, the content of these exhibit documents is often in flux both before and after the contract is executed. Thus, unless these exhibits are attached to the contract or referenced in sufficient detail, it may be difficult to prove later which of several versions of a document was incorporated into the contract.
Do all parties have signed originals?
A fully executed contract should be delivered to the other party. We typically recommend the parties execute two or more duplicate original copies of the contract (including exhibits and other attachments). Once the contract has been signed by all parties, each one would have a fully executed original.
If you are about to enter into an important contract, engage an experienced business law firm to draft or review it for you.