A contractor is about to sign an agreement with a representative of a corporation. The contractor should

A contractor is about to sign an agreement with a representative of a corporation. The contractor should

• A. verify that the representative has the authority to bind the corporation.
• B. accept any offer.
• C. require a personal guarantee.
• D. ignore representation.

Answer: (A)

When dealing with a corporation, the important step is to make sure the person you're signing with has the authority to bind the company. A contract is only truly binding on the corporation if the signer has the power to commit the company to the agreement. If you skip this check, you could end up with a contract the corporation won’t honor, or you could expose yourself to personal risk if the signer acted beyond their authority. To protect yourself, ask for proof of authority—such as a corporate resolution or an authorization letter that names the signer and specifies their scope of power—and confirm the signer’s official role and that their authority covers this type of contract and the contemplated amount. If you can’t verify that, delay signing or require that a properly authorized officer sign on behalf of the corporation. The other options—accepting any offer, demanding a personal guarantee, or ignoring the representation—do not provide the safeguards you need and can create unnecessary risk.

When dealing with a corporation, the important step is to make sure the person you're signing with has the authority to bind the company. A contract is only truly binding on the corporation if the signer has the power to commit the company to the agreement. If you skip this check, you could end up with a contract the corporation won’t honor, or you could expose yourself to personal risk if the signer acted beyond their authority.

To protect yourself, ask for proof of authority—such as a corporate resolution or an authorization letter that names the signer and specifies their scope of power—and confirm the signer’s official role and that their authority covers this type of contract and the contemplated amount. If you can’t verify that, delay signing or require that a properly authorized officer sign on behalf of the corporation. The other options—accepting any offer, demanding a personal guarantee, or ignoring the representation—do not provide the safeguards you need and can create unnecessary risk.