Happy October, Reader!

A question about how to sign contracts came up on our Foundry™ Member’s call recently, and because it’s such an important part of the contract process, we wanted to make sure you knew the best practices around this, too.

Here are two things to check to make sure you’re signing your contract properly!

Check 1: Get the effective date of the contract right

This sounds simple in theory, but it’s really important.

The date upon which the contract is effective should be listed in the introductory paragraph of your contract.

This date needs to be the date that the second of the two parties sign the contract.

Check 2: Sign correctly with your name, designation & LLC

Again, sounds simple but in practice, we see many errors with this.

You want to sign in the following structure:

Your name, your designation within the company (e.g. owner, manager, etc.), LLC name

So let’s say your name is Mary Johannesson, your title within the company is Founder and your company name is Johannesson International LLC.

You would then sign as follows:

Mary Johannesson, Founder, Johannesson International LLC

Other questions you might have around signing contracts:

➡️ Can a team member sign a contract on behalf of the business or does it always need to be the founder signing?

Team members may indeed sign contracts with clients, vendors, etc., if they have those permissions spelled out in your Operating Agreement and in their employment agreement.

What’s an Operating Agreement?

It’s the document that governs your LLC and, in the eyes of the law, helps separate your LLC from yourself, giving you the liability protection you intended when you started the LLC.

Inside your Operating Agreement, you may specify points such as who has signing permissions in your business. This Operating Agreement may be updated and changed over time, so as team members come and go, you can always adjust who has signing permissions accordingly.

Don’t have an Operating Agreement? Grab one in the Foundry™!

What’s an Employment Agreement?

The term “employment agreement” does sometimes mislead a few business owners because it covers not just employees, but also contractors.

Depending on how you hired the person, this would be either the team member’s Independent Contractor Agreement or their Employment Agreement. It’s basically their work contract.

Long story short: Yes you may have Independent Contractors sign contracts on behalf of your LLC.

Don’t have an employment agreement to send when you bring people onto your team? Grab one in the Foundry™!

➡️ What do I do if myself or my client made an error in signing the contract?

In this case, send a new contract to replace the old one, and then if you’re using something like Dubsado or HoneyBook, simply delete the old agreement from the CRM.

This is one reason why it’s best practice for you to sign second, because if your client signs the contract first and makes an error, you may spot it and simply not sign the agreement but instead send another one along and give them prompts on how to correctly sign it.

If you don’t sign the agreement as well, it hasn’t been entered into, meaning you don’t need to go through the process of sending a Termination Agreement or replacing the old contract with a new one.

Signing a contract doesn’t take long, but it has a huge impact on the validity of the entire agreement. Before you sign your next contract, double check that you have all the elements you need!

With you for the long run,

The Creative Law Shop® and Foundry™ team