Authority to Bind

Authority to Bind

It is too often a question that is not asked or answered.  How does one have the authority to bind a company, a partnership, a country or even a group of victims?

A few recent events come to mind:

A small corporation was having a battle between shareholders.  One group of two had more than 50% of the voting shares and when the questions got too difficult to answer the two declared the corporation dissolved immediately.  No shareholder meeting, no nothing.  Following that event  there are still final taxes to be filed and some bills which remain unpaid.  The 50% plus are looking to the corporation to pay the bills of the now dissolved disbanded corporation.  I’m fairly sure they did not think that tantrum through.  So who is left to  bind the entity and file the remaining documents or even sign on the corporate checking account of a disbanded entity?  Does it now become a general partnership?

A group of investors was defrauded out of a large sum of money.   Several of the larger investors assembled their time and energy and did so in accordance with a group of  other smaller investors- but certainly not with the majority of investors on board.  This group of representative investors sought legal counsel but on whose authority were they acting? Did they do this on their own? Or on behalf of the shareholders that agreed? What about the shareholders that did not know or that did not agree?

A country goes up in smoke and is looking to recover assets from the former CIC (Cletptocrat In Charge).  The new leader was not elected, as there was and is no constitution and no election that has been called. They were not appointed by an existing appointed committee as those institutions have been disbanded or its representatives dismembered.  Under what authority can this person, on behalf of a nation, retain counsel or international institutions to affect  asset recovery from the former CIC?  What if the new leader is subsequently disposed of, what then?

These are not trivial questions, as power and its authority to act must flow from the client to the agent.  If the power and/or authority have been annihilated, are inchoate, or in question, how does one proceed?

To each of the scenarios above there are solutions that can work and cannot work, but the fact remains one needs to always ask the question – “Who has the authority to bind?”

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