Contracts: Authority to sign?

 

Can someone sign a contract on my behalf?

We are often approached by individuals who are confused as to whether they can be bound into contracts or liable for the debts of their spouse or other family members.

The truth is that we are all separate individuals and unless you grant somebody authority to act on your behalf, a third party (whatever their relation to you) cannot bind you into a contract of make you liable for a debt.

This has been recently reinforced by the decision of the Court of Appeal in Marlbray Ltd v Laditi and another [2016] EWCACIV476.

Marlbray Ltd v Laditi and another

This case concerned the enforceability of a conveyancing contract that had purportedly been entered into on behalf of a husband and wife, but in fact had only been signed by the husband.

The contract had been entered into at an apartment sales fair where the husband agreed to enter into a contract to buy an apartment and signed the conveyance on behalf of himself and his wife. It later emerged that the wife had no knowledge of the contract and had not given authority. The contract was later cancelled and the deposit forfeited to the vendor when the husband was not able to provide the balance of the purchase monies.

Unenforceable contract?

The husband and wife subsequently challenged the actions of the vendor in court.

They argued that as the contract had only been signed by the husband and without the authority of the wife, it was legally void and unenforceable and therefore the deposit should be returned.

At first instance the Judge agreed with this line of argument and held the contract to be void and unenforceable. The vendors appealed to the Court of Appeal.

Court of Appeal

The Court of Appeal allowed the appeal in part. They agreed with the Judge at first instance that the husband had no authority to sign on behalf of his wife and therefore the contract was not binding upon the wife.

However, contrary of the views of the Judge at first instance, the Court of Appeal considered that the contract was not void but was still enforceable against the husband.

This was due to the signed contract containing a clause whereby all signatories were joint and severally liable for the obligations of the contract.

Consequently, the Court of Appeal took the view that although unenforceable against the wife, the contract could still in theory be enforced against the husband and therefore was valid and enforceable.

What does this mean for you?

First of all, it reinforces the point that family members and relatives cannot make legally binding decisions on behalf of their relatives without that person’s authority.

It is also interesting in that it demonstrated the Court of Appeal’s determination to find a ground upon which to uphold the original contract.  It stands as a warning to anybody who may take for granted that the proximity of their relationship with their spouse may give them special legal authority.

Finally, it’s of note to conveyancing solicitors who must ensure that they have the requisite authority for all of their clients before they conduct a conveyance.

Get in touch

If you would like to discuss any of the above issues, please give our specialists solicitors in LeedsWakefieldBradfordManchester and London a call on 0113 244 9931.

 

James Gould

James Gould

Solicitor

Tel: 0113 297 3183
Email:jgould@levisolicitors.co.uk
James Gould