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

John Hancock's signature

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
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.

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  2. The High-touch Legal Services? Blog ? For Startup/Early-stage Companies » Who Can Sign a Contract for a Corporation?

    […] Please note, however, that under certain circumstances designed to protect innocent third parties, it is possible for a corporation to be bound by officers’ unauthorized signatures on contracts if (a) any officer apparently had authority to sign (California Corporations Code Section 208(b)) or (b) the contract is signed by certain combinations of two officers specified in Corporations Code Section 313 (see Why did both the President and the Secretary of the Corporation Sign that Document?). […]