Representation

According to Article 3:60 of the Dutch Civil Code, representation is the authority to perform legal actions on behalf of another. This would include receiving a statement belonging to another person or even signing an agreement in his name. Such signature binds the other person to the obligations arising from the agreement.

Representation occurs when a director signs on behalf of his company, when a lady at the supermarket pays for products at the till and sells them to the person who does the shopping and even when it is agreed on behalf of a child who is under the age of majority that he will undergo an operation in hospital.

A director may represent a company pursuant to its articles of association or under a power of attorney. If you own a business jointly, it may be wise to agree restrictions on individual directors’ authority to represent the company, for example that an agreement involving an interest whose value exceeds 10,000 euros can only be entered into by all directors acting together.

If someone is not appointed as a director under the articles of association but has the role of executive manager, then a power of attorney must be granted authorizing him to represent the company. Under Article 3:61 of the Civil Code, the grant of such a power of attorney may be either in writing or implicit.

If you enter into agreements on behalf of a company, we recommend that you ensure you have a clear written power of attorney. This will prevent you from being accused at a later stage of having entered into an agreement without proper authority. Otherwise you could be held personally liable under Article 3:70 of the Civil Code.

In the opposite situation, on a large transaction you should always check who is signing any contract to which you are a party and on what basis each signatory is authorized to represent the relevant party. The situation regularly arises that, without being aware of it, someone signs an agreement without having the proper authority. If you do your homework in advance or have this checked for you, then it is usually possible to arrange for a written power of attorney to be in place before the agreement is signed. This ensures that it is clear that the signatory is actually signing on behalf of the company you intend to do business with.

You can request details of the persons authorized to represent a company from the Chamber of Commerce. If someone is not registered as being authorized, ask for a written power of attorney. You may wish to attach a copy to the agreement. If you make agreements without checking this issue, it may emerge at a later stage that the company you thought you had an agreement with is not bound by that agreement.