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Can an employee's signature obligate a corporation?
Anonymous1 views4 answers
My corporation is being harassed by some Paladin collection agency out of Colorado. We had been using Cintas for floor mats and shop rags. We found a cheaper alternative and let the delivery guy know. Then this Paladin outfit starts calling and saying they are "investigating" and we have to give them all of our financials. Told them to get lost. Then they come up with a five year contract signed by one of our employees (who doesn't even work here anymore). Talked to the guy and he thought it was just the receipt for the delivery. He was not even an officer or anything, just a regular worker. Doesn't seem like you should be able to get any employee to sign something and then the corporation is stuck with a five year contract.
While an employee can bind a company, the answer here will be heavily fact specific under agency laws and representations that may or may not have been made by your company or understood by the vendor in similar dealings between your company and the vendor. This matter will require careful review by an attorney with experience in corporate/business law.
You should have the agreement reviewed by your corporate attorney. If the former employee did not have authority to enter into contracts on behalf of the company and you had no knowledge of the purported agreement, a strong argument can be made that the agreement was not enforceable. You should also review any other agreements, correspondence or emails with Cintas which would define the terms of your agreement regarding their services.
If your former employee was not a proper agent of the corporation, then the former employee does not have the authority to enter into a contract on behalf of the company. You need to take all of your documents and records to a consumer debt attorney for further direction and guidance.
This is a fairly common tactic with service providers who engage in less than fair dealings with a customer. Some companies, including s waste hauler or two I could name, obtain signatures and then smugly assert that they have a long term, usually self-renewing, agreement. Part of their calculus is the cost to the customer of defending a collection action. So look carefully - yes, an employee's signature can bind you.
