Pay attention to the signature block and guaranty provisions when signing a contract

May 31, 2017

The president of a builder signed a contract, but (1) neglected to put the full legal name of his business in the signature block and (2) a provision of the contract stated that “the obligations under this agreement are also a personal obligation of the builder representative signing below.” After the builder defaulted, the owner sued the president of the builder as an individual.

The Court ruled that the president was not individually liable because (1) the contract recited the parties as the legal entities, not as the president, individually, (2) the word, “president” appeared after the signature of the builder’s president, and (3) the personal guarantee section referred to the “builder’s representative” and not a specific individual.

The lesson here is to be very clear in the signature block to avoid disputes such as this. While eventually the builder’s president was found not personally liable, this was after a lengthy and expensive court proceeding.

Mission Grove, L.P. v. Hall, 503 S.W. 3d 546 (Tex. App.—Houston [14th. Dist.] 2016, no pet.).

The attached information is general in nature, is presented for discussion purposes only, and may not reflect current legal developments, nor fully explore all potential areas of this topic. The information included should not be relied upon or construed as legal advice and is not a substitute for obtaining legal advice from an attorney. No legal representation is undertaken or implied with the distribution of this information.