Tuesday, May 25, 2010

Be careful what you sign!

A recent court of appeals case affirmed the proposition that you must be careful what you sign. It involves imposition of personal liability to the members of an LLC who ignored language in a contract to their detriment.

The members of the LLC were husband and wife. Several times in a contract, the contract referred to them as “William and Teresa Grover, d/b/a Grover International, LLC.” On the signature line, however, Mr. Grover clearly signed his name “Grover International, LLC, by William Grover, Member.”

The opposing side sued for breach of contract and sought personal liability against William and Teresa Grover. The court of appeals determined that personal liability was appropriate, even though the signature block clearly referred to the LLC as the contracting party. By failing to object to the description of the individuals doing business as an LLC, the Grovers were personally liable.

Lesson learned: be very careful in what you sign! Be sure when you are acting on behalf of the business that all paragraphs consistently refer to you as a business.

For questions or advice on other legal matters, email me at jim@jwtalbotlaw.com

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