Practical tips for appointing contractors
The importance of documenting the terms on which a contractor is carrying out work for an employer is widely known. It is equally important to ensure that any appointments are correctly signed. It is advisable to appoint contractors by way of a deed. Principally, this is because the period under which you are able to bring a court action in respect of a breach of any obligations is longer under a deed; 12 years from the date any loss is suffered, rather than 6 years if the appointment is by way of a contract only.
To validly sign a document by deed:
A limited liability company will need to either:
• affix its standard seal (if it has one) with two directors/ one director and secretary signing
• have two directors/one director and a secretary sign; or
• have one director sign in the presence of a witness (who must also sign and add their details).
A limited liability partnership (LLP) will need to either:
• affix its standard seal (if it has one);
• have two members of the LLP sign; or
• have one member of the LLP sign in the presence of a witness (who must also sign and add their details).
For a partnership:
• all partners must sign; unless
• One partner has been appointed by deed to sign on behalf of all the others; or
• One partner has been authorised by the others to sign in their presence
Individuals or partners who are individuals must sign in the presence of a witness (who must also sign and add their details).
Where a Power of Attorney is used on behalf of an entity a slightly different regime applies which is not the subject of this blog.
It is advisable to ask for full names and positions of any signatories to ensure that they are appropriate people to make the signature valid and, where only one member or director signs, it is also important to ask for confirmation that nothing in the constitution of the company/LLP prevents a single member or director binding the entity.
The deed should be expressed to be delivered as a deed so that there is no doubt of the parties’ intention to be bound by it on signing or, if so specified, on dating.
Reviewed in 2015