Why did both the President and the Secretary of the Corporation Sign that Document?

Contracts and other documents usually are signed on behalf of a party by a single representative (see Who Can Sign a Contract for a Corporation?). However, at least in California, important documents often are signed on behalf of a corporation by two officers, such as the President and the Secretary. This post explains the reason for two signatures.

Corporations Code Section 313 says, in relevant part (emphasis added) that:

any note, mortgage, evidence of indebtedness, contract, share certificate, initial transaction statement or written statement, conveyance, or other instrument in writing, and any assignment or endorsement thereof, executed or entered into between any corporation and any other person, when signed by the chairman of the board, the president or any vice president and the secretary, any assistant secretary, the chief financial officer or any assistant treasurer of such corporation, is not invalidated as to the corporation by any lack of authority of the signing officers in the absence of actual knowledge on the part of the other person that the signing officers had no authority to execute the same.

Translated to normal English, that Section means, roughly: Unless you know that the officers lacked authority to sign the document, if it is signed by two officers (one from each group identified in the statute), then the corporation will be bound by those signatures, even if the officers were not given authority to sign the document.

In other words, having two officers sign is a form of protection for the other participant(s) in the transaction.

Dana H. Shultz, Attorney at Law  +1 510-547-0545  dana [at] danashultz [dot] com
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