When you receive a legal contract template for your review or you are drafting a contract, there is one thing that you absolutely need to do: check the proper parties.
So, what do I mean by "proper parties"? Simply put, these are the individuals or entities that are legally able to enter into and be bound by a contract. When drafting a contract, it's important to ensure that you're not only naming the correct parties but also that those parties have the legal authority or authorization to enter into the agreement.
For example, let's say you're a coach or consultant and you're about to enter into a contract with a client company for a group coaching for their employees.
You need to make sure that you are naming the correct company and that the person signing for the company is actually authorized to enter into a contract with you.
If you fail to verify that your client has the legal authority to sign the contract on behalf of their company, you will be setting yourself up for trouble down the line.
Now, what if you are entering an agreement with an individual? You also need to make sure that his/her real and legal name is stated in the contract and that you include an address where this person can be located in case of issues like non-payment, or breach of your agreement. Imagine the horror if your demand letters are returned because you placed a non-existing address or it turned out, the person used an alias!
Another common scenario is when multiple people or entities are involved in a project or agreement, but only some of them are named in the contract. This can create confusion and potentially lead to disputes down the line. For example, if you're working with a team of consultants, it's important to make sure that everyone who will be involved in the project is named in the contract, so there's no ambiguity about who is responsible for what.
So, why are proper parties necessary for the enforcement of a contract? By ensuring that you have the proper parties named in the contract, you're helping to ensure that the proper parties can be held liable in case something goes wrong with your agreement. It takes only a minute or two to check the proper parties and whether the party signing is authorized to do so. Take that minute because it can save you heartaches, tears, and lots of stress.