Question: One of my employees signed a 60 month lease for a laser printer without my consent. This employee was unauthorized to sign legal documents on the company’s behalf. What are the company’s rights regarding a contract signed by an employee? Thank you! — Ed
Answer: Here’s a lawyer answer for you, Ed: maybe. I would love to give you something more definitive, but this particular scenario entails a highly fact-specific inquiry. How reasonable was it for the laser printer vendor to believe that you had authorized your employee to sign the contract? What was your role in this transaction? Did you do or say anything that led the vendor to think that the employee was authorized to negotiate on your behalf? How did the provider get connected to this employee in the first place? The fact that this contract was signed by an employee instead of you is not enough, on its own, to declare it void.
If the vendor’s belief that it was working with an authorized employee was reasonable, you still have some options, but this could get messy fast. You could, of course, breach the contract. You might get sued, and you might lose, but maybe the vendor will want to avoid litigation badly enough to renegotiate. And if you do get sued and lose, you might be able to bring your own lawsuit against your employee to recover the damages you got stuck with (although, whether the employee would be capable of paying those damages would be an important factor to consider before going this route).
If you haven’t explained the situation to the vendor and asked whether they would be willing to rescind the contract and walk away, you should definitely start there. This situation isn’t risk free for them either. Suing you and losing would be expensive for them. You both will need to carefully consider whether the amount of money at issue is worth potentially subjecting yourselves to a time consuming, expensive resolution process.