Execution Of Contracts - Promptness X Representativeness Of The Undersigned

It is not rare for companies to try to make the execution of contracts with their clients a faster and simpler process (and consequently, obtain a faster consent).

A quite common, but not less sensitive situation, concerns agreements or contractual instruments executed by persons in charge of the day-to-day activities of the operation, but not necessarily listed as legal representatives of the company.

This article is intended to present a few comments on the legal effectiveness and risks associated with the representativeness of such agents in companies' transactions.

1. Expression of Will

   The legal entities' will is expressed through representation, pursuant to the respective articles of organization or incorporation.

   Such precept is grounded on the Brazilian case law and also supported by the Code of Civil Procedure - CPC and Civil Code - CC (article 12, VI, of the CPC and article 47 of the CC/02); we must further recall that the powers granted to representatives are initially limited to those required for the performance of their corporate functions.

2. Ideal Procedure for Execution of Contracts

   The safest procedure for the execution of transactions between legal entities calls for the required signature of each party's duly appointed legal representative.

   As a rule, representatives are individuals holding the respective powers required to perform such act.

   The legal certainty of a transaction formalized by the company requires that the covenants be agreed upon by the individuals with powers to do so and, further, that they act within the limits of their powers.

   Moreover, it is not possible to prevent the adverse effects of any attempt to streamline the procedures for execution of contracts.

   It is quite common for companies to provide for General Terms and Conditions in a contract (the so-called "T&Cs") to give more celerity to the contract.

   By attaching a T&C (which is intended to set forth provisions and rules of a legal nature) instead of negotiating and formalizing a contract, such method may entail a construction that the execution of the respective contract was not bilateral, but rather represented an adhesion contract, which may hamper any future arguments for the full performance of some of the contract provisions, such as for instance, the enforceability of a liability limitation clause or even an arbitration clause.

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