Independent contractors need authority to bind your agency

airplane landingFrom Travel Weekly, Mark Pestronk discusses the general rules of when independent contractors are able to enter into a binding contract that commits their principal when he talks about an independent contractor binding a travel agency.  Mark writes:

The general legal rule is simple: A person has no authority or right to bind another person to a contract without authority to do so.

The same rule applies to a person’s ability to bind a company, or one company’s ability to bind another company.

An IC is a separate legal person from the travel agency. Therefore, an IC has no right to bind the agency unless one of the following exceptions applies:

First, you can give an IC permission to sign one or more contracts in your agency’s name if that is what you want to do. You can give such authority orally or writing.

This is called “express authority.”

Second, if the IC has signed other contracts with the same supplier in the past, and your agency has performed all the duties required of it, then your course of conduct shows that the IC has the necessary authority to continue to bind your agency.

This is called “implied authority.”

Third, if the IC carries a title implying that he or she is a higher-level staffer of your agency, and if you are aware of what title the IC is using and acquiesce in its use, the IC can bind your agency if the other party reasonably believes that your IC has authority based on his or her title.

This is called “apparent authority.”

In my experience, the biggest and most common problems occur under the apparent authority exception, as many agencies mistakenly give their ICs titles that clearly give contracting parties the impression that they are officers or employees of the agency.

I have seen titles such as chief financial officer, vice president, director or manager…

Read the full story at Independent contractors need authority to bind your agency

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