Authorization enforceability: Overview, definition, and example
What is authorization and enforceability?
Authorization refers to the act of granting permission or giving formal approval for an action, decision, or transaction. It often involves obtaining approval from an individual or body that has the legal power to permit such action, such as a board of directors, government authority, or an authorized representative of a company.
Enforceability refers to the ability of a legal agreement or provision to be upheld and executed by a court of law. For an agreement to be enforceable, it must meet specific legal requirements, such as mutual consent, legality of terms, and proper execution. In essence, enforceability ensures that the terms of a contract can be legally imposed if one party does not fulfill their obligations.
Together, authorization and enforceability determine whether actions taken by a party, such as entering into a contract or making a decision, are legally valid and can be enforced by law.
Why are authorization and enforceability important?
Authorization is important because it ensures that actions taken are legally sanctioned and within the scope of the authority granted. It helps prevent unauthorized actions and protects the interests of those involved. For businesses, ensuring that actions or decisions are properly authorized helps avoid potential legal issues, such as invalid contracts or wrongful decisions.
Enforceability is crucial because it provides the assurance that contracts, agreements, and decisions made within a business or legal context can be upheld if necessary. Without enforceability, a business may face difficulties in ensuring that its agreements are honored or that it has recourse if another party fails to meet their obligations.
Understanding authorization and enforceability through an example
Imagine a company’s board of directors approves a merger agreement. The board’s authorization ensures that the decision is legally valid, as they are the authorized body to make such decisions. Once the merger agreement is signed by both parties, its enforceability means that if one party does not fulfill its obligations (e.g., delivering assets or paying a specified amount), the other party can take legal action to compel compliance with the terms of the agreement.
In another example, a business enters into a contract with a supplier for the purchase of goods. The company’s legal department authorizes the contract, ensuring that the terms are acceptable and binding. If the supplier fails to deliver the goods, the enforceability of the contract means the company can sue the supplier to recover damages for the breach of contract.
An example of an authorization and enforceability clause
Here’s how an authorization and enforceability clause might look in a contract:
“The Parties hereby confirm that the individual(s) executing this Agreement on behalf of each Party are duly authorized to bind the respective Party to the terms and conditions of this Agreement. This Agreement shall be enforceable in accordance with its terms, and either Party may seek legal remedies for any breach of the Agreement, including but not limited to damages, injunctive relief, or specific performance.”
Conclusion
Authorization and enforceability are fundamental to ensuring that decisions and actions taken by parties are legally sound and can be enforced in a court of law. Authorization provides the necessary legal approval, while enforceability guarantees that agreements are binding and actionable.
For businesses, understanding the importance of both authorization and enforceability is key to maintaining legal compliance, protecting business interests, and ensuring that contracts and decisions can be effectively executed.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.