Giving authority to someone else to sign commercial documents

Giving authority to someone else to sign commercial documents

Giving authority to a third party to sign business and legal documents on your behalf can be a risky move.  The expert commercial litigation lawyers at Bahamas law firm ParrisWhittaker are highly experienced in advising and representing businesses on their commercial dealings, including the risks and responsibilities of delegating authority.

Giving authority to a third party to sign business and legal documents on your behalf can be a risky move.   The expert commercial litigation lawyers at Bahamas law firm ParrisWhittaker are highly experienced in advising and representing businesses on their commercial dealings, including the risks and responsibilities of delegating authority.

A high profile court case in London gives senior company personnel a stark warning of the risks they face if they confer authority on third parties to sign legal documents on their behalf.

What was the case about?

UK celebrity chef, Gordon Ramsay, gave his Chief Executive Officer (CEO) authority to use a ghost writing machine to sign legal documents. Ghost writing machines are commonly used by individuals who regularly need to sign documents (for instance, authors signing books). Unfortunately, the CEO was his father-in-law with whom he has had a difficult relationship.

Ramsey argued that the CEO used the machine fraudulently, forging his signature on a personal guarantee in relation to a lease over a pub (in other words, allegedly using it without Ramsey’s permission).  Under this personal guarantee, Ramsey was personally liable for rent to the tune of £640,000.  However, he argued that the guarantee was not binding and should be rescinded on the basis of the alleged forgery.

The landlord successfully argued it was legally binding on him. The court rejected Ramsey’s arguments and ruled that the CEO was his agent, and acting within the authority given to him by Ramsey when using the ghost writing machine to sign the personal guarantee.

What does this mean?

If you appoint someone else to act on your behalf, for instance, to sign documents or enter into legal agreements, you should be fully aware of the risks this entails.  It is strongly advised that you make clear the full extent of this authority to the individual concerned to minimize the risk of future disputes. 

Ideally, this will be in the form of a formal written agreement making clear the extent and the limits of that authority (for instance, a power of attorney or an agency agreement).  Only then will it be possible to prove that the agent was acting outside of his authority to avoid a claim in the event of a future dispute.

How can we help?

The commercial litigation lawyers at Bahamas law firm ParrisWhittaker have years of experience advising commercial organisations on their commercial contracts and on giving others authority to act on their behalf in the course of the business. Contact us straightaway for urgent, strategic advice.