When Is a Signature Not a Signature?

Sunday 29 November 2015 - Filed under Contracts + Contracts - formalities + Leases + Limited liability shield

A recent unpublished (therefore, non-precedential) Appellate Division decision, Herz v. 141 Bloomfield Ave. Corp. (App. Div. 2015), illustrates the danger of getting the signature lines wrong on a commercial lease.

The commercial tenant was a corporation. The corporation’s president signed the lease as “President.” Although the lease contained language specifying the tenant’s president would be personally liable on the Lease, he did not sign the Lease as an individual and there was no signature line for him to sign.

The trial court concluded that the tenant’s president was not personally liable for unpaid rent. On appeal, the Appellate Division agreed with the trial court. The Appellate Division reasoned essentially as follows:

1. Contracts are generally “strictly construed” against the party who prepared the contract;

2. A corporation is generally separate and distinct from its officers;

3. Officers are generally not personally liable for the conduct of a corporation;

4. Even agents who sign on behalf of a corporation are generally not automatically liable on the contract they sign;

5. The tenant’s president did not sign the lease in a personal capacity and there was no signature line for him to do so.

The other facts of this case highlight the kind of complicated litigation that can result when a tenant alleges that the condition of a commercial property harmed its ability to do business and therefore harmed its ability to pay rent to the landlord. Stay tuned for a future blog piece.

2015-11-29  »  admin