“If an agreement is signed by “J. Smith, Pres., XYZ Company,” is it a personal or company obligation?”

Question: Dear Mr. Sklover, A confidentiality agreement has a “Disclosing Party” and a “Receiving Party,” that is, the Disclosing Party is providing confidential information, and wants the Receiving Party to agree to keep it confidential.

At the end of the document are the signatures, and each has the following words above the signature line: Name, Title, Company Name, Company Address.

A person (I’ll call him John Smith) has signed as the Disclosing Party, and has listed his title as President of the Company (I’ll call it XYZ Company), and XYZ Company’s address is given, then is the Disclosing Party John Smith or the XYZ Company?

Thanks for your time and opinion.

Los Angeles, California

Answer: Dear Peter: The information you provide indicates to me that the Disclosing Party is XYZ Company, and not John Smith. These are my thoughts:       

1. The inclusion of the President title, the Company name, and the Company address, indicate that John Smith did not mean to be individually bound to the agreement. It would make no sense at all for John Smith to add in those bits of information if he was an individual party to the agreement. They all indicate that he signed in his Company capacity, each and every one.

2. That said, all words of an agreement – not just its signature lines – must be considered in interpreting its meaning. At the same time, Peter, you must look at “all four corners” of a document to come to a conclusion as to its meaning. For example, if at the beginning of the confidentiality agreement it said, “The Company information below is just contact information; I intend to be bound individually,” then that would surely indicate that John Smith meant to be individually bound. Likewise, does the confidentiality agreement say, somewhere “Disclosing Party means John Smith, individually,” then the signature line would not be so convincing.

3. If, after looking in all “four corners” of the agreement it is confusing, or inconsistent, then we can look “outside” the agreement for more help.  If, hypothetically, the beginning of the agreement makes it clear that John Smith meant to be bound individually, yet the signature lines made it clear that John Smith did not mean to be bound individually, only then can we look “outside” the agreement to such things as (a) circumstances, (b) oral statements overheard by others, (c) what most people would see as reasonable to expect, and (d) the past conduct of the parties. In law such “evidence outside the agreement” is referred to as “Parol” evidence, which has nothing at all to do with “parole from jail,” at least I don’t think it does.

Peter, this is how lawyers are trained to think, and after a while it just becomes second nature. Be careful, though . . . it could be catching. (Just kidding!) I hope it is helpful to you, and that this information will help you now and in the future. Thanks for writing in.

Al Sklover

 Repairing the World –
One Empowered and Productive Employee at a Time ™  

© 2012 Alan L. Sklover, All Rights Reserved.

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