It’s not what you sign but the way that you sign it
In commercial dealings getting the names right can be critical and particularly in the case of when you are dealing with a company. In the recent case of Hamid v Francis Bradshaw Partnership the Court of Appeal had to decide whether a contract had been made with a company or with the person who signed it.
Dr Hamid was a director and shareholder of a limited company, Chad Furniture Store Limited (Chad), which traded under the name of “Moon Furniture”. Dr Hamid instructed Francis Bradshaw Partnership (FBP) to provide engineering services in respect of a retaining wall on land which he personally owned. The contract was part oral and part on letter written on Moon Furniture letter heading and signed by Dr Hamid above the name of Moon Furniture. FBP had no knowledge of the link between Chad and Moon Furniture notwithstanding this information was publically available. Dr Hamid found FBP’s work unsatisfactory and he pursued a claim for damages against them. FBP contended, amongst other things, that the correct contracting party was Chad and not Dr Hamid and it argued that Chad had not suffered any loss because it did not own the land and therefore there was no case for damages.
The Court of Appeal found that Dr Hamid had personally engaged FBP and therefore was entitled to recover damages. The Court said that when looking at the identity of a party to a contract, it would adopt an objective approach and consider what a reasonable person, provided with the relevant information, might conclude. In this case, at no point did anybody inform FBP that Moon
Furniture was a company. Even if someone at FBP had made that assumption it would not have mattered as the court would only take into account facts known to both parties and not their private thoughts.
The Court ruled that a person who signed the contract would be the contracting party unless the contract made it clear that the signatory was acting as agent for a principal or a company or there was evidence to show that both parties knew the signatory was acting as an agent or company officer at the time of the contract was entered into.
In this case and in the absence of the above, it was found that Dr Hamid’s signature at the foot of the written contract made him, in his personal capacity, the contracting party and he was therefore entitled to bring a claim against FBP. The Court made the point that if an agent does not make it clear that he is signing for someone else, he will be treated as signing on his own behalf.
The case provides a useful reminder of the importance of ensuring that the parties to a contract are always clearly identified. Where a director or other authorised signatory is signing a contract on behalf of the company, he or she should ensure that this fact is clearly stated in the signature section and that the document clearly identifies the company by reference to its name, company number and registered office. Signatories who fail to do this could find themselves unintentionally being held personally liable under the contract.
Solicitor
Commercial Dispute Resolution
YWong@LawBlacks.com
0113 227 9346
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Yat Wong
