Warranty of Authority Clause

Warranty of Authority Clause

A Warranty of Authority Clause is a provision commonly included in contracts, particularly in agreements involving agents or representatives. This clause asserts that the person signing the contract on behalf of another party has the legal authority to bind that party to the agreement. It serves as a guarantee that the individual has the necessary power and authorization to act in the capacity they claim, thereby preventing disputes that may arise if the authority is later challenged.

For example, if a company executive signs a contract with a vendor, the Warranty of Authority Clause would confirm that the executive is empowered to enter into that agreement on behalf of the company. If it turns out that the executive did not have the authority to sign the contract, the clause would protect the vendor from any claims made by the company that the contract is void due to the executive’s lack of authority. This clause helps ensure that both parties have confidence in the contractual relationship and mitigates risks associated with unauthorized actions.

In summary, the Warranty of Authority Clause is crucial for establishing the legitimacy of representatives in contractual agreements, safeguarding the interests of all parties involved.