Who has the authority to make contracts on behalf of a corporation?

An officer or other agent’s actual authority to make a contract on behalf of a corporation is a matter that is governed internally and should be dealt with in the corporation’s bylaws. But regardless of an agent’s actual authority, the corporation may nonetheless be bound by contracts made by an officer. For example, California law provides that any contract made in the corporation’s name that is “done within the scope of the authority, actual or apparent, conferred by the board or within the agency power of the officer executing it,” binds the corporation and the corporation acquires rights under the contract. Cal. Corp. Code § 208(b). And another provision adds that any written contract, including a promissory note or a mortgage, signed by (1) the chairperson of the board, the president, or any vice president, and (2) the secretary, any assistant secretary, the chief financial officer, or any assistant treasurer is not invalidated by any lack of authority of the signing officer(s) unless the other party had actual knowledge that the signing officer(s) did not have the authority to sign the contract on behalf of the corporation. Cal. Corp. Code § 313. (This provision does not require two signatures—if the same person holds offices in both categories, such as president and secretary, that is sufficient for the statute to apply.) This provision creates a conclusive, rather than a merely rebuttable, evidentiary presumption of authority to make a contract on the part of the specified corporate officers. Snukal v. Flightways Mfg., Inc., 23 Cal. 4th 754, 782, 3 P.3d 286, 307 (2000). In effect, the specified officers are invested with the apparent authority to make contracts on behalf of the corporation, even if the corporation has not given them the actual authority to do so, unless the other party knows that the officers are not authorized to make a contract.