Is a contract valid if an employee signed it without permission?

Why does an employee's authority matter?

Businesses often limit which employees can enter into contracts on their behalf. Questions may arise if:

• The employee was not authorized to sign contracts.
• Internal approval procedures were not followed.
• The employee exceeded their assigned responsibilities.
• The contract required approval from management or the board.
• The other party believed the employee had authority to act.
• Similar contracts had been signed by the employee in the past.

These facts can affect whether the business is treated as having agreed to the contract.

What happens after the contract is signed?

The business's actions after learning about the agreement may also affect the situation, such as:

• Whether the business accepted the benefits of the contract.
• Whether it performed its obligations under the agreement.
• Whether it objected promptly to the employee's actions.
• Communications between the parties after signing.
• Company policies regarding contract approval.
• The expectations of the other party.

The overall circumstances may help determine whether the agreement is enforceable.

What to do next…

1. Confirm whether the employee had authority to sign the contract.
2. Review company policies and approval procedures.
3. Gather emails and other communications related to the agreement.
4. Determine how the business responded after learning about the signed contract.

What to consider in your specific situation

• The employee's role and level of authority.
• Internal company policies and approval requirements.
• Whether the other party reasonably believed the employee could sign.
• Actions taken by the business after the contract was signed.
• Prior dealings between the parties.
• Applicable laws governing agency and business authority.

Since every situation is different, consider getting more information through Rocket Copilot or an attorney review to move forward more confidently.