Execution of documents
Roger Williams & Others and Redcard Limited & Others
The contract and supplementary agreement were for the sale of Redcard's freehold interest in a residential building in London as well as the sale of five self contained residential flats, each let on long leases to individuals who were all directors and shareholders of Redcard.
Under the contract the "Seller" was designed as being each of the individuals and Redcard. The purchase price was ?3.35 million, being an unapportioned aggregate sum of the freehold and leasehold interests.
The purchasers, Mr and Mrs Williams refused to complete the purchase despite having been served a notice to complete, contending that the contract had not been validly executed by Redcard. They argued that in the absence of a use of a common seal, the statutory provisions required the execution clause to contain words expressing that the signatures of the authorised signatories are "by or on behalf of" the company.
The Court of Appeal held that the words "by or on behalf of" did not require to be expressed on the signing page for a document to be validly executed by authorised signatories of a company within Section 44 (4) of the Companies Act 2006 (CA 2006). It was sufficient that it read "SIGNED ?. SELLER" and that the company was defined as the Seller in the body of the contract.
Although the decision suggests that section 44 can be interpreted in a flexible manner, the court also states that, from a practical point of view, it is always important to expressly state the capacity in which the signatories are signing, in particular when individuals are signing in more than one capacity. Leave to appeal was initially declined but has since been granted so we will hear from the Supreme Court in due course.