By the company: Overview, definition and example
What does "by the company" mean?
The phrase "by the company" typically refers to actions, decisions, or obligations carried out or fulfilled by a business entity, as opposed to individual employees, shareholders, or third parties. It emphasizes that the responsibility lies with the company as an entity, often acting through its authorized representatives, such as directors, officers, or other agents.
For example, "by the company" may appear in legal documents or contracts to indicate that the company itself—not any specific individual—is the party responsible for performing certain duties, such as issuing payments, making decisions, or fulfilling obligations.
Why is "by the company" important?
This term is important because it reinforces the principle that a company operates as a separate legal entity from its owners or employees. It clarifies where responsibility lies within an agreement or legal obligation, ensuring accountability for actions attributed to the company as a whole.
For businesses, this phrase helps define the company's legal obligations and differentiates them from those of individuals acting on its behalf. For counterparties in agreements, it ensures clarity on who is ultimately responsible for fulfilling specific obligations, whether financial, operational, or legal.
Understanding "by the company" through an example
Imagine a loan agreement includes a clause stating that all payments shall be made "by the company." This means the company itself is legally obligated to make the payments, even though individuals within the company, such as an accountant or CFO, may execute the actual transaction. The responsibility lies with the entity, not the individual.
In another example, a shareholder agreement may state that dividends will be distributed "by the company" at the discretion of its board of directors. This indicates that the company, acting through its board, is responsible for deciding and processing the dividend payments.
An example of a "by the company" clause
Here’s how a "by the company" clause might appear in a contract:
“All notices, payments, and obligations required under this Agreement shall be performed by the Company, acting through its duly authorized representatives.”
Conclusion
The phrase "by the company" establishes that the business entity, rather than any individual associated with it, is responsible for specific actions or obligations. This distinction reinforces the company’s legal identity and ensures clarity in contracts and agreements. Including such language helps prevent misunderstandings and ensures accountability for actions performed in the name of the company.
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.