The Right Way to Sign a Contract

Signing a contract correctly ensures that you are bound in the way you intend, whether as an individual or on behalf of a business. Many entrepreneurs in Kansas City and Boulder assume their business structure automatically protects them, but that protection can disappear if contracts aren’t signed properly.

If you are signing a contract as an individual, you are personally responsible for its obligations. If you are signing on behalf of a business, proper formatting can help ensure that the company, rather than you personally, is bound by the contract. 

Here’s how to avoid that costly mistake.

First, Identify Who is Signing the Contract

The first paragraph of a contract, known as the preamble, should clearly state whether an individual or a business is the party to the agreement.

• If you are signing as an individualur name should appear as the party to the contract.
• If you are signing on behalf of a business, use your company’s legal name as it appears in your Secretary of State filings, including the correct entity classification (LLC, Inc., etc.). For example: Doe Designs, LLC.

Using the wrong name in this section could result in unintended liability for contract-related obligations.

Second, Use the Correct Signature Format

The signature block of a contract determines who is legally bound by the agreement. Below are two examples. The first shows how to sign as an individual. It is pretty simple, just sign and print your name. The second example shows how to sign as a business. You should list the business name, then sign and print your name, along with your title (CEO, Member, Owner, Manager, etc.).

If you own an LLC or Corporation, always use the business format to ensure that your business, not you personally, is bound by the contract.

Final Thoughts

Whether you are signing as an individual or on behalf of a business, using the correct format ensures that the right party is legally bound by the contract. If you are operating in Kansas City, Boulder, or beyond, taking a few extra steps to sign properly can help avoid confusion and legal issues down the road.

*This article is general in nature and is not legal advice.