Legal Question in Business Law in California

Validity of contracts signed by independent contractors

Can an independent contractor sign a binding contract on any matter on beahlf of the company that they are working for?


Asked on 7/20/06, 11:46 pm

3 Answers from Attorneys

Carl Starrett Law Offices of Carl H. Starrett II

Re: Validity of contracts signed by independent contractors

There are situations where an independent contractor can legally bind the principal. There is a legal doctrine called "ostensible authority" that might apply. If a third party has a good faith belief is the "ostensible" or "apparent" authority of the independent contractor to bind the principal, then the third party might be able to enforce the contract.

This is a very fact-driven analysis, so you would need to provide more information about the particular situation. I suggest you repost the question with more details.

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Answered on 7/21/06, 12:47 pm
Terry A. Nelson Nelson & Lawless

Re: Validity of contracts signed by independent contractors

Of course, with appropriate actual or apparent authority.

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Answered on 7/21/06, 4:06 pm
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Validity of contracts signed by independent contractors

Maybe, but usually not.

The situations in which X can sign X's name to a contract with the effect of binding Y to that contract mostly have to do with the law of agency, i.e. X can bind Y because X is Y's agent. Corporate officers are often agents of their employers.

There are other situations not based strictly upon agency, i.e. X may have a power of attorney to act on behalf of Y.

The relationship of principal and agent is based upon authority given by the principal to the agent. The authority may be given by a written contract, such as between a home seller and the real estate broker, or may arise by virtue of the agent's position (the president of a corporation is presumed to be the corporation's agent for most purposes, and so are lesser officers acting in their usual capacities, e.g. purchasing agent, ticket agent, etc. Agency may be created by inference, too -- if Y allows you to think X is his agent, Y will not be heard to deny that X had, in fact, no authority. And so on. The law of agency is pretty flexible and reasonable, and generally protects the principal and the third party from bad acts by the agent or persons appearing to be agents.

Now, in your situation, a contractor may be the agent of the owner or employer, and often is, but it would be rare indeed for the contractor to have agency powers covering "any matter."

Further, in construction-type contracting, the prime contractor is not usually considered to be the agent of the owner in dealing with sub-contractors and suppliers; the contractor-subcontractor relationship is based upon the contract between them, and not any agency authority held by the prime.

Your question is far too bare-bones to give a one-size-fits-all answer. If you send me some more facts, I'll supplement my answer, no charge.

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Answered on 7/21/06, 12:41 am


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