A recent case of MLG Enterprises LLC v. Johnson in the Middle Section of the Tennessee Court of Appeals discussed whether a representative who signs a commercial contract can be bound individually by the agreement.
In most cases, a representative who signs a contract is not personally bound to the contract. See Dominion Bank of Middle Tenn. v. Crane, 843 S.W.2d 14, 19 (Tenn. Ct. App. 1992); Anderson v. Davis, 234 S.W.2d 368, 369-70 (Tenn. Ct. App. 1950). However, a corporate representative who signs a contract may be personally bound “when the clear intent of the contract is to bind the representative.” 84 Lumber Co., 356 S.W.3d at 382-83 (emphasis added). “A cardinal rule of contractual interpretation is to ascertain and give effect to the intent of the parties.” Allmand v. Pavletic, 292 S.W.3d 618, 630 (Tenn. 2009). The clear intent of the parties “must be determined from the contract itself.” Lazarov v. Klyce, 255 S.W.2d 11, 14 (Tenn. 1953); see 84 Lumber, 356 S.W.3d at 383.
A party‟s signature is presumed to be in a representative capacity, as distinguished from a personal obligation, if it is preceded by the corporation‟s name and the words “by” or “per” and followed by the officer‟s title. See Creekside Partners, 2013 WL 139573, at *3; Cone Oil, 669 S.W.2d at 664; see also Bill Walker & Associates, Inc. v. Parrish, 770 S.W.2d 764, 770 (Tenn. Ct. App. 1989) (“A corporate officer‟s signature, preceded by the corporation‟s name and followed by words denoting the officer‟s representative capacity, binds only the corporation.”); Anderson, 234 S.W.2d at 369 (“A correct form of signature which is uniformly regarded as imposing no personal liability upon the officer signing is that of a signature containing the corporate name, followed by the word „per‟ or „by‟, which, in turn, is followed by the name of a corporation officer.”). Moreover, a party also clearly indicates his or her intent to sign in a representative capacity when the signature is followed by his or her title, the word “for” and the name of the corporation. See Cone Oil, 669 S.W.2d at 665 (“The use of the work [sic], „for‟, is as clearly indicative of intent as the words „by‟ or „per‟.”). However, without the word “for” or similar language, corporate designations that follow a party‟s signature simply describe the person who signed without altering the capacity in which she signed. Id. (quoting 17-A C.J.S., Contracts, § 347, p. 341).
In one case (84 Lumber), the Supreme Court held that the parties intended to hold the defendant personally liable based on a guaranty provision that was written in capital letters and set off from the rest of the contract. 84 Lumber, 356 S.W.3d at 381-82. Subsequently, this court decided another case that involved a guaranty provision. Creekside Partners, 2013 WL 139573, at *5. In that case, this court determined that the defendant was not personally liable because the guaranty provision in question was not written in capital letters, indented, or otherwise distinct from the rest of the contract. See id. at *5-6.
