Sometimes we learn the simplest things last. Not doing those simple things can be costly. One of the simplest rules of owning and operating a corporation or a limited liability company is to clearly sign papers and contracts as a representative of the business entity. If the signature block fails to show that the signer signed as a representative of the business, it can lead to individual liability for the signer. That was the outcome of In re LMcD, LLC, where a bankruptcy trustee sought to hold an LLC’s owner responsible for the LLC’s debt. The bankruptcy trustee tried out no fewer than four sophisticated arguments in an attempt to hold the owner liable. The Court said no to each one. After all was said and done however, the owner was found liable for the company’s debt for the simple reason that his signature failed to show he had signed in a representative rather than an individual capacity.
This is an important and easy problem to take care of. Always put the company name above your signature, but the word “By” on the signature line, and include your title next to your name. If you would like a generalized template to use for your signature block, contact us and we can help you.
— BBC&B