Signatory: Overview, definition and example
What is a signatory?
A signatory is a person or entity that officially signs a contract or agreement, indicating their consent to its terms. By signing, a signatory legally binds themselves or the organization they represent to fulfill the responsibilities outlined in the document.
For example, when a CEO signs a partnership agreement on behalf of their company, they are the signatory for that contract.
Why is a signatory important?
Signatories are important because they validate a contract, making it legally enforceable. They ensure that the agreement has been properly authorized and that the parties involved are committed to its terms.
For businesses, identifying the correct signatory is crucial to ensure the contract is binding. If the wrong person signs—someone without proper authority—the contract could be challenged or invalidated.
Understanding a signatory through an example
Imagine a company enters into a lease agreement for office space. The contract is signed by the company’s Chief Financial Officer (CFO), who has the authority to approve such agreements. In this case, the CFO is the signatory, and their signature binds the company to the lease terms.
In another example, a freelance graphic designer signs a contract to provide services to a marketing agency. Since they’re operating as an individual, the designer themselves is the signatory, binding them personally to the agreement.
An example of a signatory clause
Here’s how a signatory clause might look in a contract:
“Each Party represents and warrants that the individual signing this Agreement on its behalf is duly authorized to execute this Agreement and to bind the respective Party to its terms.”
Conclusion
A signatory is the individual or entity that signs a contract, legally committing to its terms. Their role is critical for ensuring that the agreement is valid and enforceable.
By ensuring the right person signs as the signatory, businesses can avoid disputes over authority and strengthen the legal standing of their contracts. It’s about making agreements official and binding.
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.