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An employee of mine signed a contract when she is neither…

An employee of mine signed...
An employee of mine signed a contract when she is neither authorised to do so or has the authority. Only one person may sign contracts and that is the Managing Director.The contract is almost a scam in that it mimics Telkom but is in fact Telecom Directories.The original contract when sent through was queried by the Managing Director.The salesperson at Telekom Directories ignored the query and badgered the debtors department until a junior staff member signed the agreement.No emails that were sent were answered and no phone calls. Now we have a debt collector stating the contract is legal whereas we are of the opinion it is not.Any advice?
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Answered in 2 minutes by:
7/26/2017
WALLSTREETFIGHTER
Category: Legal
Satisfied Customers: 17,253
Experience: 14 years experience in representing clients, current member of legalshield, legal club of america, NYSUT and UFT attorney
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hello

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this is an unfortunate situation, what you should do is send them an email you do not owe the debt, and will file a lawsuit against them for fraud, and file a complaint with the State Attorney Generals Office.

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Under the law, an employee who has no authority cannot encumber an employer on a contract, so you do have a valid defense, the only issue is that you have to weigh the costs of litigation is worth it over a possible settlement.

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Customer reply replied 6 months ago
Can a business be held to an employee signing when they do not have the authority to do so?
Customer reply replied 6 months ago
The cost is minimal the principle is what annoys me, this is clearly stated as being a scam and many people have been caught with this.
Roy Hadavi
Category: Legal
Satisfied Customers: 1,107
Experience: Attorney at Law Offices of Rosenstein & Associates
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Hi. My name is ***** ***** I am happy to provide assistance. I am currently formulating my answer and will send it to you momentarily.

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It is possible that Telekom may hold your business liable for the agreement signed by your employee. There are two issues here.

Internally (for your company): If you have an employee policy stating that the employee is not authorized to sign agreements on behalf of the company or if signing agreements is outside of the job description/scope of the employee, then the employee is not authorized to sign on behalf of your company. However, the internal side only applies to reprimanding the employee.

Externally (from Telekom's side): Depends on whether Telekom had reason to believe that the employee was not authorized (e.g. job title, communications from the employee or other individuals within the company). If Telekom knew or should have known that the employee was not authorized, then your business is not liable for the agreement.

I would highly recommend preparing an employee policy (or inserting such a policy into your employee handbook) regarding authority to enter into agreements.

I hope this answers your questions. Please let me know if you have any follow-up questions or if you need clarification.

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Customer reply replied 6 months ago
On the assumption that the contract with our employees strictly denies authorisation on behalf of the company then where do I stand?

The issue is whether Telekom was aware that the employee was not authorized to enter into the agreement. Was Telekom informed by the employee or another company individual that the employee was not authorized or was it clear from other circumstances (such as the employee's job title) that the employee was not authorized to enter into the agreement.

The contract with your employees only helps for reprimanding the employee, not for preventing Telekom from holding the agreement as valid.

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Customer reply replied 6 months ago
They did not enquire - they simply badgered the office but ignored my initial email asking who they are.

Unfortunately, they do not have an obligation to inquire. Unless there was something under the circumstances that makes it clear the employee was not authorized, they can hold your company liable for the agreement.

You may want to review the agreement to see if it has a clause stating that the employee executing the agreement is authorized to do so on behalf of the company. If the agreement does not have this clause, this would bolster your claim against Telekom, that the employee was not authorized to enter into the agreement and therefore the agreement is invalid.

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Thank you so much for allowing me to help you with your question. I have done my best to provide information which fully addresses your question. If you have any follow up questions, please ask! If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service as Good or Excellent (i.e., 4 or 5 stars)(hopefully Excellent/5 stars!). Otherwise, I receive no credit for assisting you today. I thank you in advance for taking the time to provide me a positive rating!

Roy Hadavi
Category: Legal
Satisfied Customers: 1,107
Experience: Attorney at Law Offices of Rosenstein & Associates
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