This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Ensure your business agreements are legally binding. Learn who has the authority to sign contracts, the rules under the Companies Act, and how to avoid disputes over signatory power.
Signing a contract on behalf of a company is a critical legal act: when done correctly, the company is bound by the contract's terms; when done incorrectly, the contract may be unenforceable or subject to dispute. Under the law of England and Wales, authority to sign a contract depends on company law rules, internal governance, and the conduct or delegation of authority. This article explains who can sign contracts, how authority works in practice, relevant legal rules, and steps businesses can take to avoid problems.
Why Signing Authority Matters
A company is a separate legal entity under the Companies Act 2006. It can only be bound by a contract when someone with actual or apparent authority signs on its behalf. Authority refers to the power given to an individual to commit the company to contractual obligations. If a contract is signed by someone without authority, the company may not be bound and the contract may be open to challenge.
Authority Under Company Law
Statutory Authority: Companies Act 2006
Two key provisions in the Companies Act 2006 affect who can sign contracts for a company:
1. Section 43 – Signing on behalf of the company
A contract can be made on behalf of a company by “a person acting under its authority, express or implied”. This means that the company can be bound when a person (director or otherwise) signs a contract with actual or implied authority from the company.
- Actual authority means the board has expressly authorised the individual (for example, via board resolution).
- Implied authority may arise from the person's position, role, or past conduct. For example, directors typically have implied authority to sign contracts in the ordinary course of business.
- Apparent authority can bind a company if the other party reasonably believed, based on the company's conduct, that the person had authority. A classic case on this is Hely‑Hutchinson v Brayhead Ltd, where apparent authority arose from the company allowing a senior officer to act.
2. Section 44 – Execution “by” the company
Certain formal documents (especially deeds) must comply with stricter execution requirements under section 44. A company executes a document if it is signed:
- By two authorised signatories (directors or company secretary),
- By a director in the presence of an independent witness, or
- By affixing the company's common seal in accordance with the company's articles.
For regular day‑to‑day contracts, section 43 usually applies. For formal documents such as deeds, section 44 procedures must be followed.
Who Typically Has Authority?
Directors
Directors are the primary individuals with authority to bind a company. They are appointed to manage the company's affairs and, unless limited by the company's articles or a board decision, usually have authority to sign business contracts as part of ordinary business operations.
Company Secretary
Where one exists, a company secretary may also execute documents under section 44 as an authorised signatory for deeds. However, for simple contracts under section 43, the secretary binds the company only if given specific authority.
Other Officers or Employees
Non‑directors (such as senior managers, procurement officers, or authorised agents) can sign contracts if authorised by the board. Such authority must be granted expressly (for example, in a board resolution or written delegation) or might arise by implication from role and practice.
Types of Authority Explained
Actual Authority
Actual authority is created when the board of directors formally delegates power to an individual to enter into contracts on the company's behalf. This is the safest and clearest form of authority and is usually documented in:
- Board minutes
- Written delegation policies
- Formal authorisation letters
Actual authority prevents disputes about whether the company intended to be bound.
Implied Authority
Implied authority arises from a person's position or conduct. For instance, a finance director or procurement manager may have implied authority to sign routine supply contracts if the board has historically permitted such actions.
Apparent Authority
Apparent (or ostensible) authority occurs when the company behaves in a way that leads others to reasonably believe a person has authority to act on its behalf. It may bind the company even if the individual lacked actual authority, provided the other party's belief was reasonable.
Deeds vs Simple Contracts
The formalities differ between simple contracts (ordinary business agreements) and deeds (e.g. certain property transactions or guarantees):
- Simple contracts: Signatures by someone acting under the company's authority under section 43 suffice. No witness is strictly required.
- Deeds: Must be executed under section 44, typically by two authorised signatories, or by a director with a witness, to be valid.
Checking Authority in Practice
When dealing with other companies, it is prudent to verify that the signatory has appropriate authority. Practical steps include:
- Checking Companies House to see who is registered as a director.
- Asking for board resolutions or authority letters confirming that the individual is empowered to sign.
- Including execution clauses in contracts specifying how the company should sign and who may sign for it.
This reduces risk of disputes over enforceability.
What Happens If Someone Signs Without Authority?
If someone without authority signs a contract for the company:
- The contract may be unenforceable against the company, though it might bind the individual personally in some circumstances.
- The company may be bound through apparent authority if a third party reasonably believed the signatory had authority.
- Independent evidence (such as board minutes) confirming lack of authority can support a challenge in courts or tribunals.
Clear internal policies on signing authority and regular communication with counterparties help avoid liability and disputes.
Practical Guidance for Businesses
To ensure contracts are validly signed:
- Define authority in the articles of association and board policies.
- Document board resolutions or delegations when appointing authorised persons.
- Train staff on signing authority and limits.
- Verify authority in counterparties' signatories before entering significant contracts.
These measures help protect contractual rights and reduce the risk of invalid or disputed agreements.
Key Takeaways
Contracts for limited companies in England and Wales must be signed by someone with authority to bind the company. Directors and company secretaries usually have inherent authority, and other individuals may have authority if delegated by the board. Contracts can also bind companies through implied or apparent authority. For formal deeds, stricter execution rules under the Companies Act 2006 apply. Clear internal delegation and verification practices help ensure contracts are enforceable and protect against disputes.
