Modern Counsel for Growing Companies
In plain English
The legal power to commit a company to a contract or other obligation. It may come from actual authorization or from the company’s conduct creating reasonable apparent authority. A person’s ownership percentage or claimed title alone does not resolve whether they can bind the business.
Types and key distinctions
Representative Capacity
The role in which a person acts for another person or entity rather than individually. A contract should identify the legal entity and the signer's authorized title or role. Clear capacity language helps establish who undertook the obligation, although separate guarantees or personal promises can still create individual liability.