When signing a Contract for Sale on behalf of a Company it is so important that the right people sign to ensure that the Contract is legally binding.
Section 127 of the Corporations Act 2001 (Cth) sets out the methods by which a company may validly execute documents, including contracts for sale, so that they are binding on the company. This section provides statutory mechanisms for execution and offers protection to parties dealing with companies.
Under section 127(1), a company may execute a document (including a contract for sale) without a common seal if the document is signed by:
- Two directors of the company; or
- A director and a company secretary; or
- For a proprietary company that has a sole director who is also the sole company secretary, that sole director/secretary.
If the company chooses to use a common seal, section 127(2) provides that the seal must be fixed to the document in the presence of and attested by:
- Two directors; or
- A director and a company secretary; or
- For a proprietary company with a sole director/secretary, that person alone.
Key things you should look out for:
- You should always check the ASIC company extract to confirm the identity and officeholders of the company.
- Ensure the contract is signed by the correct combination of directors and/or secretary as required by section 127.
- If the company has a sole director/secretary, ensure this is clearly indicated on the execution page.
It is important you obtain legal advice before entering into any legal contract on behalf of a company to ensure you understand the legal implications of what you are signing.
If you need advice on a contract give one of our experienced solicitors a call today on 02 4627 3333.
This article was published on 01/12/25 and the information is valid as at the date of publishing. This article is general in nature and is not and should not be considered or relied on as legal advice. Meehans Solicitors is not responsible in the event this information is relied upon by the reader in the absence of specific legal advice.