Power to bind a third party in its name

Power to bind a third party in its name

"I do the accounts for a hairdressing salon owned by a friend of mine. I received a form from a company that publishes telephone directories asking me to check and complete the address details. I skimmed the form and thinking it was from Directories, stamped it with the company stamp and signed it. We're now receiving invoices for CHF 860! What can I do? I should point out that I don't have the company's signature".

Marianne, Geneva

Since you are not authorised to bind the salon by your signature, there is no valid contract. Under art. 38 of the Swiss Code of Obligations, if a person enters into a contract without authority on behalf of a third party, the third party only becomes a creditor or debtor if it ratifies the contract. If your friend does not expressly state that she accepts this contract, it is deemed not to have been concluded between the hairdressing salon and the company that is now sending you reminders.

On the other hand, under Articles 23 and 24 of the Swiss Code of Obligations, a contract is not binding on a party who, at the time it was entered into, was in a fundamental error. You can try to claim that you were misled, but it will be up to the judge to decide.

So write a letter to the company by recorded delivery, arguing primarily that the contract was not validly concluded and, secondarily, that even if you had had the authority to represent the hairdressing salon, this would have been an essential error.

If the publishing house sends you a summons to pay, lodge a full objection. It will then be up to the company to produce proof of such a contract in order to justify its claims.

It should be pointed out, however, that under art. 39 of the Swiss Code of Obligations, if ratification is refused, the person who assumed the capacity of representative may be sued for damages resulting from the invalidity of the contract, unless he can prove that the other party knew or should have known of the absence of powers. In your situation, the fact that you affixed the company stamp when you did not have authority could result in you owing damages to the other party. That said, you may also be able to rely on essential error. Since essential error is applied restrictively by the courts, it would still be prudent to submit your case to a lawyer if your opposing party were to take legal action against you. If necessary, you can contact the Geneva Bar Association at rue Verdaine 13, where you can receive support for a small fee.