Debt recovery
SIGNER WITHOUT AUTHORIZATION, CAN THE DEBT BE RECOVERED?
Mr. Ngo Van Quan – President of X Company asked: “My company signed a goods trading agreement with Y Company. The agreement was signed by Mr. Phan Hoa – Vice president of Y company. Because of the trust I conducted to directly sign without checking an authorization letter (minutes on debt confirmation was also signed by Mr. Hoa). The agreement had stamps of both companies. Up to now, my company has delivered full of goods and issued VAT invoices but Y company has not paid the remaining debt (only paid 60%) with the reason that the agreement and minutes on debt confirmation are invalid because they were signed by the vice-president who is not authoritative. In this case, are the agreement and minutes on debt confirmation invalid? Can we recover the debt?”

Thank you for your trust and sending the question to Phong & Partners. According to Clause 1, Article 12 of Law on Enterprises 2020, a legal representative of an enterprise is an individual who represents an enterprise to perform rights and obligations arising from the enterprise's transactions. In addition, in accordance with Article 14 of Law on Enterprises 2020, an authorized representative needs authorization letters when performing transactions. So, according to these regulations, transactions or agreements signed by a legal representative or an authorized representative are valid. However, as stipulated in Article 142 of Civil code 2015, the civil transactions performed by a person without authorization do not give rise  to rights and obligations to the represented person, except he/she knows without protests. Accordingly, if there are any foundations to demonstrate that the represented person knows without protests, a document signed by a person without authorization will still have legal value.

Therefore, in order to insure the agreement and minutes on debts confirmation signed by the Vice-president of Y company against legal value, Mr. Quan needs to use information and evidence such as invoices, delivery documents, payment documents via bank, discussed contents to demonstrate that the legal representative of Y company knows these transactions without protests. Accordingly, Mr. Quan can request Y Company to pay the debt in accordance with the agreement and minutes on debt confirmation signed by both parties.

In the above case, to prevent disputes arising when signing an agreement, parties need to carefully review content of agreement, legal representative’s information and signer's authorization. If there is no legal representative, you must request your partner to provide an authorization letter. Actually, many enterprises suppose that requesting an authorization letter will make the partner feel uncomfortable so they pass and inadvertently create a partner aperture to cause trouble, shirk responsibilities, get into unworthy disputes.

The above is our advice. If you still have any questions, please contact Phong & Partners to be answered.

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PHONG & PARTNERS LAW FIRM

Add: 6th Floor, Thanh Loi Building, 249 Nguyen Van Linh Street, Danang city - 0905.102425

   Son Tra Branch: 01 Dong Giang street, Danang city - 0905.205624

   Lien Chieu Branch: 21 Truong Van Da street, Danang city - 0901.95099

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Tel: 0236.3822678

Email: Phongpartnerslaw@gmail.com

Web: https://phong-partners.com

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SUNRISE BAY
FAFIM
Pizza Hut
Makitech
Skyline
Đăng Hải
Khả Tâm
Defarm
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27
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23
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17
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EVN
SUNRISE BAY
FAFIM
Pizza Hut
Makitech
Skyline
Đăng Hải
Khả Tâm
Defarm
28
27
26
25
23
22
17
18
19
20
EVN
SUNRISE BAY
FAFIM
Pizza Hut
Makitech
Skyline
Đăng Hải
Khả Tâm
Defarm
28
27
26
25
23
22
17
18
19
20
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