Legal Question in Business Law in California

Yes, but it's not an ironclad argument. Even employees who lack actual authority to sign contracts for their employers can have what the law calls apparent authority. Apparent authority exists when the employer gives the other contracting party reasonable grounds to believe that the employee can bind the company to a contract. An employee can't give apparent authority to himself, but his employer can do so inadvertently. What matters is whether the other party reasonably believed, due to the employer's actions or inactions, that the employee could enter into a contract on the employer's behalf.

Also, even if your employee lacked both actual and apparent authority, your company may still be bound to the contract if it ratified the agreement after learning about it. Making a payment can be enough to ratify the deal.

If you want to get out of the contract you should consult with a lawyer ASAP.

I would want to see their basis for apparent authority, and then challenge it. A letter may clear it up. If they continue to pursue, I need to examine the business relationship a little more closely to advise.

Best,

Daniel Bakondi, Esq.

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415-450-0424

The Law Office of Daniel Bakondi

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San Francisco CA 94102

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Although I have not seen the "contract" things are generally not as "ironclad" as they might seem and there may be many different defenses, including those suggested by the other responders. You should consult with a lawyer right away as starting or continuing to use that service could be argued to be an acceptance of what was otherwise a voidable contract.

Jon Reich

310.478.2541

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I've dealt with this exact situation previously. Did you get it resolved?