Wednesday, March 31, 2010

Don't expose your personal assets to business liabilities -- be careful how you sign documents

If you've formed a corporation for your business, one of the reasons you've done so is to avoid personal liability for business debts. If you sign your name wrong, however, you've defeated the purpose and exposed yourself to lawsuit and your assets to judgment collection.

When a corporate enters into a contract, an officer or other agent of the corporation signs the contract. The only way the other party to the contract knows you are signing as an officer/agent, is a designation of your title or agency. If you sign the document and don't indicate that you are signing as an officer/agent of the corporation, you could be sued personally if the contract is breached, and your personal assets could be subject to the business debt. This is critical for things like leases or unsecured debt obligations. 

So, two things to remember:
  1. Make sure the corporate name on the contract is proper and contains the "Inc." (or equivalent) designation
  2. Make sure your name is printed under your signature, with your title, so that it is clear you are signing for the corporation, and not entering into the contract individually

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