Authority

Representations and Warranties Anatomy™ →Go uptown A “typical” Authority clause: Authority: You have taken all necessary steps to approve and execute this agreement and perform your obligations under it. view template Representations and warranties generally | Representations | Warranties | Covenants | Acknowledgements | Representations in the ISDA | Warranties in the GMSLA | Representations in the GMRA | Waiver by estoppel | AcknowledgementCommon representations: Status | Capacity | Authority | No violation | Consents | Obligations binding | Principal | Understanding | Non-reliance | No representation | Unencumbered owner | No default or potential event of default | No litigation | No fiduciary obligation | Representations and warranties Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Assuming you have the capacity to enter into an agreement, there's also the question of whether you have taken the necessary internal corporate steps to officially do so. Hence, the authority rep.

Whether the fellow who purports to sign the contract for your counterparty has any ostensible grounds to do — whether she is properly appointed by the board or, by dint of her role within the organisation, has the general authority to sign — so is a question of her authority. Here the law of agency lends an innocent contracting party a hand, with the doctrine of ostensible authority meaning one can rely on someone who seems to have appropriate authority even if she doesn’t, as long as you don’t (or can not reasonably have been expected to) know that.

But for those who don’t trust the law of agency — or their colleagues’ gullibility in believing people are who they claim to be — there’s this neat rep. It is blighted by the same metaphysical canker as a capacity warranty, in that if you in fact do know the chap executing the contract isn’t properly authorised, then no representation that he gives you saying that he is will make a blind bit of difference. You might have a negligent, or even fraudulent misstatement claim against him, but he’s just some guy, you know, his pockets won’t be that deep, and if you knew it was a misstatement, good luck establishing causation.

Odd spot: often combined with the capacity representation into a capacity and authority rep. But they’re quite different things, in this commentator’s pedantic view.

See also

• Capacity and authority