Before a supply contract is signed, the single question that most often goes unverified is a deceptively simple one: does the person sitting across the table actually have the authority to bind their company? The answer is not found by asking them. it is found by reading the company's constitutive documents, its registered powers of attorney. The minutes of its governing bodies. Additionally, any restrictions imposed on signatories by statute or by internal policy. When those sources are read carefully, they consistently reveal one of three conditions: the signatory has full authority, the signatory has limited or conditional authority, or the signatory has no authority at all. Establishing which of these applies is not a courtesy check. it is a legal prerequisite for enforceability. Additionally. In a supply relationship it determines whether your counterparty's commitments can be held to account when performance fails.
Why signatory authority matters specifically in supply relationships
Supply chains operate on speed and trust. Procurement teams are under pressure to close terms quickly. Additionally. Counterparties are often eager to present a single point of contact who can "get things done." That dynamic creates a structural incentive to skip the authority question. The consequences of skipping it, however, are disproportionate to the time it would have taken to verify.
In a supply context, the authority risk concentrates at three moments:
- Contract execution. If the person who signed the framework agreement or purchase order lacked authority, the agreement may be voidable by the counterparty or – depending on the applicable law – void from the outset. You may have delivered goods or services against a commitment that was never legally made.
- Variation and novation. Supply contracts are frequently amended – delivery schedules shift, specifications change, pricing is renegotiated. Each amendment that is signed by an unauthorised person creates a fresh enforceability gap.
- Guarantees and indemnities. Where a parent company or a group entity provides a supply guarantee, the signatory risk at that level can be even more acute: internal authorisation thresholds for guarantee obligations often exceed those for standard commercial contracts.
None of these risks are abstract. Cross-border supply disputes regularly turn on precisely these facts. Additionally. Courts in multiple jurisdictions have declined to enforce contracts. or have held that silence on the authority question amounted to acceptance of the risk by the counterparty who failed to verify.
What the sources actually show – and what they do not
The starting point for any authority analysis is the corporate register of the jurisdiction where the counterparty is incorporated. Corporate registers in most European jurisdictions record, at minimum, the identity of directors, the scope of their representative powers, any joint-signature requirements, and whether those powers have been formally restricted. These entries are typically public and. importantly. have legal notice effect: a third party who contracts with a registered officer in reliance on the register is generally protected against undisclosed restrictions. Subject to good-faith requirements that vary by jurisdiction.
What registers reliably show: the identity and appointment status of statutory representatives (directors, managing partners, CEOs). whether joint signature is required (e.g.. Two directors must sign together). formal restrictions registered against a director's authority. the existence of registered powers of attorney granted to specific agents. and the legal form of the entity. This governs which rules on representation apply.
What registers do not show: internal resolutions that restrict authority below the registered level but have not been filed. board or shareholder decisions that have been made but not yet registered (particularly relevant in jurisdictions with registration lag). powers of attorney granted but not registered. and. critically. the substance of internal approval thresholds. This may require a specific contract value to be approved by a board before any director can execute.
This gap between public register data and internal reality is the zone of residual risk. Bridging it requires a document-level review: the articles of association, the most recent board or shareholders' resolutions touching on authority. The delegation framework (if one exists). Additionally, any specific authorisation produced in connection with the transaction at hand.
The principal sources and how to use them
The commercial or company register is the foundation. Extract the current entry – not a historical printout – and read it against the names of those who will sign. Confirm that the register entry is current and that no cessation or restriction has been filed since the most recent update. In jurisdictions where register entries carry limited disclosure, cross-check the filing date against the signing date of the intended agreement.
The articles of association (estatutos, statuts, Satzung, atto costitutivo, etc.) define the internal architecture of authority. They will often specify whether the board must approve contracts above a certain value, whether certain categories of transaction require shareholder sign-off. Additionally. Whether the CEO or managing director has plenary powers or only ordinary-course powers. These documents are not always publicly available in full. However, in many jurisdictions a filed version is retrievable from the register. Additionally. Counterparties can be asked to produce the current version as a condition of contract execution.
Board resolutions and delegation instruments are frequently the most important documents and the least often requested. A resolution specifically authorising the signing of this contract – or a standing delegation that covers it – is the clearest evidence of authority. Where the articles require board approval for transactions above a threshold. A resolution confirming that the relevant threshold has been met and the signatory authorised is not optional: it is the document that closes the enforceability loop.
Powers of attorney are used extensively in supply contexts, particularly where the actual signatory is not a statutory director. A power of attorney must be read carefully for scope (does it cover this type of contract?), value limits (does it cap the commitment the agent can make?). Duration (has it expired?). Additionally, form (is it notarised or apostilled as required by the governing law?). A power of attorney that is defective on any of these dimensions does not cure an authority gap – it creates an additional one.
Group structure documents matter where a subsidiary is signing on behalf of, or with the guarantee of, a parent. Parent-level authorisation may need to be separately evidenced. Additionally. The register entry of the subsidiary will not tell you whether the parent has authorised the subsidiary to enter this commitment or what limits the parent has placed on group-level exposure.
Residual risk zones that sources cannot resolve
Even a thorough document review leaves identifiable residual risk zones. Understanding them is part of the analysis – not an admission that the review is incomplete.
Registration lag. In jurisdictions where changes in directorship or authority take effect on filing but the register is only updated with a delay. There is a window during which the publicly available data does not reflect reality. A director who resigned last month may still appear on the register. A new restriction may have been filed but not yet indexed. The legal effect of this lag varies by jurisdiction, but the factual risk is consistent: you may be relying on a record that has already changed.
Undisclosed internal restrictions. Many jurisdictions permit internal restrictions on director authority that are not registered and therefore not effective against third parties acting in good faith. but "good faith" has a specific legal meaning. Additionally. Courts have sometimes found that a sophisticated commercial party had constructive notice of an obvious restriction. If the articles you have reviewed contain a value threshold and the contract you are signing is close to or above it, you cannot simply assume that the threshold does not apply.
Apparent authority in agency law. In common-law-influenced jurisdictions, a person who lacks actual authority may nonetheless bind their principal through apparent or ostensible authority if the principal has represented them as authorised. This doctrine works in your favour when you are the relying party – but it is not a substitute for verification, because apparent authority is established after the fact, in dispute resolution, not before it.
Ratification risk. Some legal systems permit a principal to ratify an unauthorised act after the fact, effectively curing the defect. But ratification requires positive steps and is not automatic. Do not assume that performance under a contract will constitute ratification: many courts have declined to treat partial performance as ratification of a transaction that was entered into without authority.
What to do before a supply contract is executed
A practical pre-execution authority review for a supply counterparty covers five steps, each with a distinct evidence requirement:
- Pull the current register entry for the counterparty entity and every related entity whose obligations are relied upon (guarantors, parent companies, group entities named in the contract).
- Obtain and read the articles of association in their current, filed version. Identify any value thresholds, subject-matter restrictions, or procedural requirements for contract execution.
- Request a board resolution or equivalent authorisation specifically referencing the transaction, or a standing delegation instrument that clearly covers it. If the counterparty resists producing this, treat that resistance as a material flag.
- Verify any powers of attorney on scope, duration, and form. If the signatory is not a statutory representative, the power of attorney is not ancillary evidence – it is the primary authority document.
- Document the review. Keep copies of every document reviewed, with the retrieval date noted. If a dispute later arises over enforceability, your ability to demonstrate a good-faith, contemporaneous authority review will be a significant asset.
This framework applies regardless of the size of the transaction. The risk of contracting with an unauthorised signatory does not scale with deal value – a small framework agreement that is later disputed can cause as much commercial disruption as a large one.
Where the evidence ends
Public sources – registers, filed documents, published articles of association – provide a baseline. They can establish that a director is registered, that no formal restriction appears on the public record, and that the legal form of the entity is consistent with the authority claimed. What they cannot do is confirm that internal governance requirements have been met, that a required resolution was actually passed, or that no subsequent changes have occurred that have not yet reached the register.
This is where legal analysis takes over from document retrieval. The question shifts from "what does the register show?" to "given everything the register and the documents show, what is the residual risk that this signatory lacked authority. Additionally. How is that risk allocated under the applicable law?" That is a legal question. Additionally, it requires legal judgment. about the governing law, about the relevant doctrine. Additionally, about the specific facts of the transaction.
For supply relationships that involve meaningful value, cross-border elements. Alternatively, counterparties in jurisdictions with complex authority frameworks. The analysis is not one that should be left to the procurement team or resolved by a standard clause in the contract representations. A representation that the signatory has authority is only as good as the underlying fact – and the underlying fact is established by document review, not by assertion.
Service tiers for counterparty signatory and authority review
Ferraz & Whitmore offers structured authority review as a standalone engagement or as part of broader counterparty due diligence for supply relationships. The following tiers reflect the depth of analysis and the volume of source material reviewed.
| Tier | Scope | Price (EUR) | Not included |
|---|---|---|---|
| Signal | Register check on one entity; verification of statutory representatives; flag on joint-signature or registered restrictions; written summary memo. | 590 | Review of articles of association; board resolutions; powers of attorney; multi-entity structures. |
| Standard | All Signal scope plus: review of articles of association; analysis of any value thresholds or subject-matter restrictions; review of one power of attorney or delegation instrument; risk memo with recommended contractual protections. | 1 150 | Review of board or shareholder resolutions not produced by counterparty; group-structure analysis; review of guarantor entity. |
| Extended | All Standard scope plus: review of board or shareholder resolutions; group-structure authority mapping for up to three related entities; review of all powers of attorney produced; legal opinion on enforceability risk under governing law; call to discuss findings. | 2 500 | Litigation support; translation of source documents; notarisation or apostille services; ongoing monitoring. |
Each engagement is scoped to the specific counterparty and transaction. Where the authority question is particularly complex – multiple jurisdictions, group guarantees, or a signatory acting under an unusual instrument – scope is discussed and agreed before work begins. To discuss your situation, contact the team at info@ferrazwhitmore.com or submit an inquiry via the contacts page.
Related analysis
Authority questions in supply relationships frequently intersect with broader counterparty risk and corporate structure concerns. The following practice areas address connected issues:
- Corporate Law – entity-level governance analysis and corporate structure review.
- M&A – authority and capacity review as part of transaction due diligence.
- Litigation & Arbitration – enforceability of contracts where authority was disputed after the fact.
- Corporate Disputes – shareholder and director conflicts affecting signatory authority.
- Analytics – further counterparty intelligence reports and jurisdiction-specific assessments.
Disclaimer: This page is provided for informational purposes only and does not constitute legal advice or a legal opinion. The analysis reflects general principles applicable across multiple jurisdictions and may not reflect the specific rules of any particular jurisdiction or the particular facts of your situation. No attorney-client relationship is created by reading or relying on this page. For advice specific to your circumstances, please contact Ferraz & Whitmore directly. Ferraz & Whitmore is regulated by the Ordem dos Advogados of Portugal.