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Owner liable for non corp entity / Release for code disclosure  / Comment on know who you’re dealing
August 16, 2018
Owner liable for non corp entity / Release for code disclosure 


     We have a contract for the installation and monitoring of a small convenient store.  The store is privately owned and the contract was put in the name of the store (ie. Portland Convenient Store).  This is not a corporation.  Would the owner of the store (who signed the contract) be liable for the contract if the store goes out of business without some sort of personal guarantee?
            Here is an easy way to know who is liable on your contract.  There are two types of legal entities, corporation and limited liability company.  If your subscriber is either of those then no individual is personally liable unless a guarantee is signed.
            If your subscriber is a partnership then the partnership and all partners are liable.

            If your subscriber is a sole proprietorship then the sole proprietor is liable; no other guarantee is needed.
            Same goes for how you conduct your own business.
            Though you need to know who you are conducting business with, it’s really the subscriber’s obligation to let you know who you are dealing with.  So if the subscriber is Portland Convenience Store, signed off by Joe Schmo, then Joe is probably going to be liable.  He is signing on behalf of himself, or he is signing as agent for an undisclosed principal.  
            It matters.  If there is a loss the real entity may claim it never signed the contract.  When you go to sell a particular buyer may weed out contracts that are not properly filled out and executed.
Release for code disclosure

            I am looking for a Release or Waiver of Liability contract.
    For business reasons, we are going to be turning over to our Customer the programming passcodes to their fire systems
            We can certainly prepare such an agreement.  We have the agreement for Texas because Texas requires that the code be turned over provided the subscriber signs a waiver of liability.  You can contact our Contract Administrator Eileen Wagda 516 747 6700 x 312 and ask for the form for a nominal charge.
Comment on know who you’re dealing with from July 31, 2018 article
        When I first saw your newsletter July 31, 2018 I thought, great, just what I need to know, but it isn't.  I am supposed to go to an assisted living facility today to sign an agreement.  Typically we send a completed agreement (your Commercial All in One) via email at least a day before so they can review it. Originally the administrator told me that the owner was going to be in on Friday (two Friday's ago), then last week when I followed up after not hearing and she told me to come in anytime she will sign.  It makes me wonder since it is an existing system that has problems (appear to be minor issues) and I wrote in that minor issues, issues that only require adjustment no parts and can be repaired in less than one hour each will be included in the monthly inspection work, the cost to get the system back to normal will be rolled into the overall costs for inspections averaged over the life of the agreement. 
       My concern is, what if the owner looked at the agreement, figures he can say you sign so we can get out of it later?  What if we do the initial inspection, testing and repairs and then they say she didn't have authority to sign?  
       How are we to know who is authorized and makes the agreement binding?
Thank you,

            The contract needs to be signed by an officer of the entity, probably a corporation or LLC.  This is an assisted living facility; it’s not a sole proprietorship.             My office has an interesting collection case pending now.  A self-created trust signed the Commercial All in One; defaulted and we sued.  The Trust claimed that only the Trustee of the trust could sign, not a property manager. 
            Anyone with authority can sign, and a Trustee is not necesary, but the argument caused us a moment of pause and lots of research.  Take the time to get proof of authority and keep in mind that the agent cannot be the one to confirm the agency; that needs to come from the principal.
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
200 Garden City Plaza
Garden City, NY 11530
516 747 6700 x 301
516 747 6700