Due execution: Overview, definition, and example
What is due execution?
Due execution refers to the proper signing and completion of a contract or legal document to ensure it is valid and enforceable. This means that all necessary parties have signed the document in accordance with legal and contractual requirements, such as using the correct signatories, following witnessing or notarization rules, and complying with governing law.
For example, a company agreement may require two authorized officers to sign a contract for it to be considered duly executed. If only one officer signs, the contract may not be enforceable.
Why is due execution important?
Due execution is important because it ensures that contracts and legal documents are legally binding. If a document is not properly executed, it may be challenged in court, leading to disputes over its validity.
For businesses, due execution protects against unauthorized agreements and ensures compliance with corporate governance rules. For individuals, properly executing documents like wills, real estate deeds, and financial agreements prevents legal complications and ensures their intentions are carried out.
Understanding due execution through an example
Imagine a corporation signs a loan agreement. The company’s bylaws require both the CEO and CFO to sign any financial contract. If only the CFO signs, the lender may later discover that the agreement was not duly executed and challenge its enforceability.
In another example, a person signs a will but fails to have the required witnesses present as required by law. Since the will was not properly executed, a court may rule it invalid, leading to legal disputes over the person’s estate.
Example of a due execution clause
Here’s how a due execution clause might appear in a contract:
"Each Party represents and warrants that this Agreement has been duly executed by its authorized representatives and constitutes a legally binding obligation enforceable in accordance with its terms."
Conclusion
Due execution ensures that contracts and legal documents are properly signed and legally enforceable. By following execution requirements, businesses and individuals can prevent disputes, protect their legal rights, and ensure compliance with applicable laws.
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.