Liability of Unpermitted Work and Contract Signing Authority
Does a release of liability exonerate contractors who have performed unpermitted work?
When a client requests that a contractor perform unpermitted construction work, should the contractor and client mutually sign a release of liability for any claims related to unpermitted work? Will these hold up in court?
Certain contract terms can limit liability exposure from potential claims that may arise. For such terms to safeguard contracting parties from liability, they should be properly drafted and in line with California law.
However, the release of liability does not guarantee that parties will be absolved of responsibility. There are acts that parties cannot limit liability for, like willful injury to property or persons, gross negligence, fraud, or violations of law, whether that law violates were intentional or not. Therefore, in the case where work was done in direct violation of the law, the release of liability would not protect the contractor from fault.
According to the California Civil Code § 1668, “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own fraud, or willful injury to the person or property of another, or violation of law, whether willful or negligent, are against the policy of the law.”
Therefore, a release of liability for unpermitted work may not be enforceable.
Can an employee bind a company to an agreement by signing a contract they do not have authority to sign?
When an individual or individuals incorporate, the company exists as its own legal entity that is separate from the owners. Certain representatives such as managers, board members, and other personnel are designated with authorization to sign for the company.
If an unauthorized employee signs a contract or document on the company’s behalf, that can cause various legal problems.
According to Restatement (Third) of Agency § 2.03 (2006): “Apparent authority is the power held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.”
Are you entering into a contract and have doubts as to whether or not the person signing for the other side has complete authority to do so? You may be especially worried if you are signing an important contract for a major deal. Regardless of the case, request proof that the person signing has the signing authority. Always keep a copy of the authorization for your records.
In some cases, the company can get out of a contract on the basis that the representative did not have signing authority. Consult an attorney if you enter a contract and the other party tries to back out of it by claiming the person who signed did not have the authorization to sign on the company’s behalf. In some situations, the contract may still be enforceable when the person who signed it had apparent authority. On the other hand, if your employee signed an agreement without authorization and without your knowledge, the contract may not be binding.
If you have business disputes and need legal expertise, call San Diego Business Lawyer Christopher Villasenor to help you with your next steps.
Call Us Today: 619-375-2956
Email Us: chris@sdlawfirm.net