authority to bind
Definition
Authority to bind means that a specific person has the legal power to make decisions and sign agreements that create real obligations for a business or organization. When someone with this authority signs a contract, the company itself becomes legally responsible for fulfilling whatever was promised in that agreement.
Example
If your sales manager signs a supply contract with a vendor but never actually had authority to bind your company, you might still be stuck honoring that contract if the vendor reasonably believed he had that power.
Watch Out
Always confirm that the person signing any contract on the other side actually has the authority to bind their company, because signing with the wrong person can create messy legal disputes about whether the deal is even valid.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.